Bitcoin has dropped to $90,737.62, reflecting a 0.8% decline over the past 24 hours. This downturn comes amid rising bearish sentiment, with the likelihood of the cryptocurrency closing the year below $90,000 now estimated at 50%.
The recent price movement has seen Bitcoin testing a critical support level near its 7-day moving average, currently at $89,420. The ongoing volatility in the cryptocurrency market is largely influenced by traditional market deleveraging, which has instilled a sense of risk aversion across various asset classes.
One of the primary catalysts for Bitcoin”s price pressure this week has been a shift in year-end expectations. Following a notable 4.2% decline, Bitcoin reached a low of $86,681 earlier this week, marking its lowest point in seven months after peaking at $126,223 in October.
Richard Teng, CEO of Binance, emphasized that the broader deleveraging trends are contributing significantly to the current market conditions, leading to increased selling pressure as traders reduce their exposure as the year draws to a close.
On a more positive note, the Singapore Exchange has introduced Bitcoin and Ether perpetual futures trading, aimed exclusively at accredited and institutional investors. This development enhances 24/7 trading accessibility and high leverage options, supporting long-term institutional interest in the crypto market. However, the immediate impact on prices has been muted due to prevailing bearish market sentiment.
From a technical perspective, Bitcoin is presently navigating critical support at its 7-day moving average. Trading below all major long-term averages, the cryptocurrency sits about 2% under the 20-day simple moving average (SMA) at $92,702, and significantly beneath the 50-day ($102,440) and 200-day ($109,770) SMAs, highlighting a clear downward trend.
The current trading volume on Binance spot markets stands at $1.63 billion, indicating moderate institutional interest, yet it remains below the higher levels observed during significant market breakouts earlier this year. Key technical indicators show the daily Relative Strength Index (RSI) at 40.06, placing Bitcoin in neutral territory, which allows for potential further declines without entering oversold conditions.
The Moving Average Convergence Divergence (MACD) histogram is showing a positive reading of 714.6, which hints at a possible bullish momentum divergence, despite the MACD line sitting at -4,052. Additionally, Bitcoin”s position at 0.4159 on the Bollinger Bands suggests it is trading within the lower half of its 20-day range, with the lower band at $81,013 acting as a crucial support area.
In terms of immediate price levels, traders should note resistance at $93,092, coinciding with the 24-hour high and the 20-day moving average. Conversely, support remains at $89,420, the current pivot area. A breach below this level could lead to intensified selling pressure towards the strong support level at $80,600, which aligns with the Bollinger Band lower boundary. On the flip side, reclaiming the $93,000-$93,500 range could indicate short-term stabilization and a potential retest of resistance at $107,500.
Considering Bitcoin”s correlation with the broader cryptocurrency market, its price movements are currently more influenced by the unwinding of leveraged positions than by fundamental adoption metrics. As institutional traders increasingly view Bitcoin as a risk asset during uncertain market periods, the correlation with traditional markets remains heightened, particularly with year-end portfolio rebalancing on the horizon.
The trading outlook for Bitcoin in the near term presents two scenarios. The bullish case suggests that if institutional buying surfaces around the psychological level of $90,000, it could provide support and lead to a retest of $100,000, especially if market sentiment improves. Conversely, a failure to maintain the 7-day moving average could pave the way for a decline towards the strong support at $80,600, with potential further weakness targeting the yearly low of $76,322. Year-end tax selling combined with ongoing deleveraging could exert additional pressure on Bitcoin”s price throughout December.
Traders are advised to implement appropriate risk management strategies, with conservative traders possibly placing stops below $89,000 for long positions, while aggressive bears might target the $80,600 support level on any breach of the current support.
