25% Bitcoin Price Rally Could Follow Today’s Correction If History Holds
Bitcoin’s price fell to $103,300 ahead of the FOMC meeting, with traders scaling back risk. The decline, supported by bearish trends and geopolitical tensions, aligns with seasonal weaknesses. However, steady U.S. demand exists, and previous market patterns suggest a potential rally might follow this correction, with short-term supportive levels identified.
Bitcoin experienced a decline, dropping to around $103,300 following traders’ decision to scale back risk ahead of tomorrow’s Federal Open Market Committee (FOMC) meeting. The correction, the result of a bearish weekly candle close, raises concerns about a potential trend reversal. Adding to this caution are rising geopolitical tensions linked to the Israel-Iran conflict, which are exacerbating the risk-off sentiment in the market.
According to data from Bitcoin Vector, a market pulse aggregator affiliated with Swissblock, this recent decline is not solely driven by macroeconomic factors. The current situation also reflects seasonal weaknesses and a decrease in on-chain network growth, indicating a slowdown in spot demand. Furthermore, the liquidation of more than $434 million in Bitcoin futures has highlighted that this recent price movement is largely leverage-driven, with many traders opting for cautious strategies rather than increasing their positions.
While there are concerns, the Bitcoin Coinbase Premium Index, which measures the price differences of Bitcoin between platforms like Coinbase and Binance, has remained positive for most of June. This signals a steady level of demand from U.S. investors, but this demand has had limited impact on the overall price due to wider market caution.
In addition, profit-taking activity among “mid-cycle holders”—those who have held their Bitcoin for six to twelve months—accounted for substantial realized profits. Reports from Glassnode show that these investors realized approximately $904 million in profits on Monday alone. This group represented 83% of total profits, indicating a shift in market dynamics with more reactive participants looking to secure gains during this uptick.
Despite these developments, long-term holders, or LTHs, maintain a somewhat optimistic outlook. Bitcoin researcher Axel Adler Jr. observed that LTHs have largely refrained from making large-scale transactions, reflecting a historically bullish trend. Encouragingly, a healthy MVRV Z-score, which suggests Bitcoin is fundamentally undervalued, and positive Coin Days Destroyed (CDD) momentum point towards calculated profit-taking rather than a panicked sell-off.
Based on historical patterns, similar setups in past market cycles have often led to rallies of 18-25% within a span of six to eight weeks, which could imply a potential price target of around $130,000 by the end of the second quarter.
From a technical standpoint, Bitcoin may be nearing a short-term bottom within the $102,000-$104,000 range, recognized for its dense liquidity and historically significant order blocks. The proximity of the Bollinger Bands suggests that Bitcoin could react quickly as it approaches the $102,000 level, with the middle band at approximately $106,000 acting as a dynamic resistance. This reactivity is underscored by earlier instances where price movements have respected those levels, particularly during June’s consolidation phase.
Moreover, the Bollinger Bands are currently showing signs of compression, indicating that a spike in volatility could be on the horizon. If price manages to reclaim and close above $106,748, that could validate a bullish mean reversion aiming for $112,000. However, failing to maintain above certain support levels, particularly a break below $100,000, might lead to a push towards $98,000. Data from Alphractal suggests that $98,300 serves as critical support for short-term holders, with a breach of that level potentially leading to a more significant downward correction.
In summary, while the recent price drop for Bitcoin raises some concerns, both short-term and long-term holders exhibit a range of sentiment signals that could hint at a rebound. The influence of macroeconomic factors, geopolitical tensions, and technical indicators will likely play a crucial role in determining Bitcoin’s trajectory in the coming days.
To summarize, Bitcoin’s recent price drop to $103,300 ahead of the FOMC meeting has raised some caution in the market. However, despite the pullback, there are signs of steady demand from U.S. investors and other indicators that suggest potential for a rebound. History shows that similar setups have resulted in significant price rallies, while technical levels near $102,000-$104,000 are being closely watched for signs of support or further declines.
Original Source: www.tradingview.com
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