From cointelegraph by Biraajmaan Tamuly

Bitcoin’s BTC$93,825 price correction continued on Dec. 19, creating BTC’s largest daily chart drawdown in Q4 and the steepest decline since Aug. 5. While the crypto asset briefly reclaimed a position above $100,000, the formation of a clear bearish engulfing pattern has raised further correction possibilities.

Bitcoin rally is “least volatile cycle” in 2024

Bitcoin’s bearish reaction stemmed from the cautiousness displayed by Jerome Powell, as the Fed chair suggested that the Federal Reserve will only cut 50 basis points throughout 2025, which lowered previous expectations from 4 rate cuts to 2 rate cuts.

While this development has sparked speculation of sharper drawdowns for risk assets such as crypto, Glassnode suggested otherwise based on BTC’s evolving nature in this cycle.

The onchain analytics platform said that since BTC’s first bull run in 2012, the severity of a drawdown period in a bull cycle has reduced as the market cap has increased. In 2024, Bitcoin’s deepest drawdown was 32%. For context, it was 63% in 2021, 36% in 2017, 71% in 2013, and 49% in 2011.

Glassnode said, “This may be a reflection of the significant demand opened up by the spot ETFs, as well as a growing interest from institutional investors.”

Thus, fundamentally, Bitcoin should avoid any steeper corrections based on its evolving correction period.

Related: BTC reclaims $100K but weekly chart forming ‘bearish engulfing’ candlestick

Bitcoin tests significant support at $99K and $97K

Since reaching its all-time high of $108,366 on Dec. 17, BTC dropped to $98,744. Rafael Schultze-Kraft, the Glassnode founder, identified this price range between $99,000 and $97,000 as the strongest support zone based on Bitcoin’s cost-basis distribution.

The cost basis distribution helps investors evaluate where the total supply was acquired and distributed the most across different price points.

Similarly, Axel Adler Jr., a Bitcoin researcher, pointed out a similar price point, which accounts for significant importance. The researcher said,

“The nearest significant support level is at $97.9K, held by the cohort holding coins from one week to one month.”

From a technical perspective, Bitcoin's bullish market structure is still intact in both the mid-term and long-term charts. Combining the onchain-derived support level with market analysis, a common was identified between $97,500 and $95,500.

A fair value gap (FVG) was identified in this price bracket alongside the potential retest of the 50-day EMA level for the first time since Oct. 12. Furthermore, $95,000 is also key base-level support for trend continuation.

Considering a daily candle close takes the price below $95,000, the possibility of Bitcoin dropping to $90,000 increases significantly, where key liquidity zones are established. However, the immediate attention of most traders would be on Bitcoin’s reaction between $100,000 and $95,000.