In a somewhat surprising turn of events, Bitcoin’s (BTC) ascent to a new all-time high of $108,268 was marked by an approximate 17% drop, resulting in a local low of $92,281.
This sharp decrease in price has been linked to the recent announcement from the US Federal Reserve, which implemented another 25 basis point rate cut during its latest FOMC meeting. While such rate cuts are generally perceived as positive for the cryptocurrency market, the Fed also indicated a shift in its initial projection of four rate cuts in 2025, scaling it back to only two. This news led to a widespread selling off of riskier assets by investors.
As anticipated, the considerable drop in BTC’s price raises concerns regarding the asset’s future, particularly regarding the ongoing crypto bull run.
No Cause for Alarm Yet, Analyst Suggests
In an X post on December 20, well-known crypto market analyst Burak Kesmeci noted that Bitcoin is far from entering a bear market, suggesting the asset has not yet reached the peak of its bull cycle. By employing four essential simple moving averages—SMA21, SMA50, SMA200, and SMA365—Kesmeci has drawn valuable conclusions about Bitcoin’s current market condition.
To start, the analyst points out that the leading cryptocurrency has fallen below its SMA21, which is at $99,565. Nevertheless, this shift has minimal impact on Bitcoin’s short-term outlook as the SMA21 can easily be swayed by a price breakout.
Conversely, the SMA50, currently at $91,803, has a substantial effect on Bitcoin’s short-term price momentum. If the bulls manage to maintain a daily or weekly close above this level, it would bode well for future price increases.
It is noteworthy that BTC has been on an upward trajectory since early October. In that time frame, the first cryptocurrency rose from $60,200 to over $108,000. Regarding the sustainability of this upward trend, Kesmeci asserts that Bitcoin’s distance from its SMA200 and SMA365 indicates that the asset’s bullish structure is still intact.
This is primarily because the bottom of any prolonged trend in the Bitcoin market is established when the price falls below either of these SMAs. In summary, Kesmeci reassures BTC investors that there’s no need for concern, despite the recent price drop. He highlights that corrections of 20% to 30% are typical based on the historical performance of past bull runs.
Bitcoin Price Snapshot
As of this writing, Bitcoin is trading at $97,354 after a slight rebound from its earlier decline within the last day. Meanwhile, the asset’s daily trading volume has increased by 7.35% to a total of $103.92 billion.
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