Bitcoin price rising wedge breakdown: How low can BTC go?

Navigating Bitcoin's Bearish Waters: What's Next for BTC?

Bitcoin recently corrected almost 8% from its record high above $124,500. This pullback sparks concerns, as technical indicators and whale movements suggest potential further declines, possibly pushing BTC below $100,000 in coming weeks.

Key Signals Pointing to Downside Risk

Understanding current market dynamics is crucial. Several powerful signals indicate caution is warranted for Bitcoin investors.

Rising Wedge Breakdown: A Classic Bearish Reversal

Bitcoin's confirmed breakdown from a 'rising wedge' pattern on the daily chart is a prominent bearish signal. Historically, rising wedges are bearish reversal structures, often preceding sharp declines. This wedge formed since April, with higher highs and higher lows converging.

The breach below the wedge's support trendline signifies weakening momentum and increased selling pressure. Initial support levels are $110,000–$112,000. Failure could open path towards $105,000–$108,000. If selling intensifies, BTC might extend decline to the critical $98,000–$100,000 psychological zone by September, a 20% correction from its peak.

Measuring the rising wedge breakdown suggests a downside target as low as $88,000. This bearish scenario is invalidated if Bitcoin holds strong above its 50-day Exponential Moving Average (EMA), a robust support during BTC's recent ascent. A rebound from the 50-day EMA could see price return towards $125,000 by September.

Ominous Double-Top Scenario: Echoes of 2021?

Adding to bearish sentiment is the potential 'double top' pattern on Bitcoin’s weekly chart. This pattern, with two peaks at similar levels, signals weakening bullish momentum. In 2021, a similar double top preceded a staggering 77% correction, sending BTC from nearly $69,000 to below $16,000.

If history repeats, short-term downside risks are significant unless Bitcoin stages a swift reversal. Analysts suggest a playout could see BTC retrace towards its 50-week EMA, currently around $94,750, by September. The 50-week EMA has historically served as a strong accumulation zone.

Whale Activity: Red Flag for Short-Term Momentum

On-chain metrics further reinforce the possibility of declines. Data reveals 'mega whale' addresses (>10,000 BTC) are at their lowest this year. Whale wallets (1,000-10,000 BTC) also show a decline.

This reduction in holdings by large investors signals profit-taking near recent highs. Combined with technical breakdowns, this whale-driven selling pressure increases risk of a broader pullback. Strong spot demand is needed to counteract this trend.

The Bullish Counter-Narrative: A Glimmer of Hope?

Despite bearish technicals and on-chain signals, a crucial factor differentiates the current cycle from 2021, potentially offsetting downside risks.

Federal Reserve Policy Shift: Potential Catalyst for Recovery

In 2021, Bitcoin’s peak coincided with the Federal Reserve initiating quantitative tightening (QT). The current environment contrasts: market odds strongly favor a 25-basis-point (bps) Fed rate cut in September. Such a shift towards easing could inject significant liquidity, counterbalancing Bitcoin’s short-term technical weaknesses and bolstering its broader uptrend.

Global Money Supply (M2) Growth: Fueling Long-Term Optimism

The persistently growing global money supply (M2) continues to paint a bullish long-term picture for Bitcoin. Historical trends suggest a strong correlation between M2 growth and BTC’s valuation. Analyses indicate ambitious price targets, ranging from $132,000 to $170,000 for BTC in coming months. This macroeconomic factor could sustain Bitcoin's overall bullish trajectory despite short-term corrections.

Navigating the Volatility: Practical Insights for Investors

The market presents a complex interplay of bearish technical signals and potentially bullish macroeconomic shifts. For investors, this translates into heightened vigilance and strategic decision-making.

• Stay Informed: Monitor Bitcoin’s price action, especially around support levels ($110K-$112K, $105K-$108K, $98K-$100K, and the 50-day EMA).
• Understand Risk: Every investment involves inherent risk. Don't rely solely on technical patterns; consider the broader economic landscape.
• Conduct Your Own Research: Before any investment decisions, always conduct thorough personal research. Evaluate your risk tolerance and goals.
• Consider Dollar-Cost Averaging: In volatile markets, this strategy can help mitigate risk by spreading purchases over time.

While the immediate outlook suggests potential correction and volatility, long-term fundamentals, influenced by global liquidity and central bank policies, may still pave the way for future growth. Approach the market with a balanced perspective, acknowledging immediate downside risks and long-term upside driven by broader macroeconomic forces.