Bitcoin, Fake Out or Fall Out?
Since the start of the week, Bitcoin has lost roughly 8% in value, and it's only Tuesday. This decline should not have caught traders off-guard as Bitcoin was showing signs of weakness since Trump's inauguration—a defining factor in BTC's rise to $100,000. On January 20th, Bitcoin made its all-time high of $109,000, but the original digital asset failed to hold those gains, closing $7,000 below the record high. This formed a candle with a small body and a long upper wick, resembling a shooting star with a range of about $10,000.
The following day, January 21st, BTC recorded its highest closing price of roughly $106,000. Since then, the asset remained trapped in a range between $106,000 and $90,000—a consolidation phase that lasted 98 days. This prolonged sideways movement ended abruptly today when Bitcoin crashed through long-standing support at $90,000.
However, there's reason for cautious optimism as technical indicators suggest this correction may be nearing exhaustion. The first hint that Bitcoin may have established a temporary floor appears in today's candlestick formation. At 6:50 PM ET, Bitcoin is trading at $88,674, approximately $3,000 above today's low beneath $86,000. This low coincides with the 38% Fibonacci retracement from the August 4th bottom near $57,000 to the ATH—a level that previously served as support before Bitcoin's breach of $100,000.
The RSI is approaching oversold territory, currently reading 30, which places it on the threshold of being technically oversold (defined as below 30). The last time Bitcoin's RSI reached these depths was in early August at the start of our Fibonacci retracement data set, when prices hovered around $56,000.
That said, the decline could easily extend further. Two key areas where BTC might find support are $81,000 and $72,000. The $81,000 level represents the current 200-day simple moving average. The $72,000 zone carries greater significance as a support area, having served as formidable resistance through five consecutive tops around the April 2024 halving, as well as one notable peak in October 2024 before Bitcoin finally conquered this threshold in November 2024. This $72,000 mark also aligns with the 61.8% Fibonacci retracement level from the same range ($57,000–$109,000).
Whether Bitcoin consolidates at current levels before heading lower or not, downward momentum appears to be the path of least resistance following such a phenomenal run. At its peak, BTC had gained 120% over approximately 200 days.
Multiple Fibonacci extensions utilizing various rallies from recent years indicated that the all-time high was likely a cyclical top for Bitcoin. The 8% decline over the past two days is negligible within the broader context, and further significant downside appears probable before a meaningful recovery begins. Technical studies and historical price action point to $72,000 as the most likely target for a bottom.