Bitcoin (BTC) has pulled back over 10% from its record high, marking a notable correction in what has been one of the most explosive bull runs in cryptocurrency history. After reaching an all-time peak of $108,353 in mid-December, the flagship digital asset dropped sharply to a low of $95,700—sparking widespread debate among traders and analysts about whether this is the beginning of a market top or simply a healthy consolidation before another leg higher.
This article dives deep into the technical signals, market dynamics, and long-term outlook for Bitcoin, helping you understand what might come next in this evolving cycle.
Understanding the Recent Bitcoin Price Drop
The decline in Bitcoin’s price began shortly after it hit $108,353 on December 17. Over the following week, BTC lost approximately 8%, briefly dipping below $96,000 before showing signs of stabilization. While corrections are common after significant rallies, this one stands out due to several key factors:
- Record ETF outflows: On a single day, over $680 million flowed out of spot Bitcoin ETFs—marking one of the largest daily outflows since their inception.
- Broad-based selling: Unlike previous outflows that were primarily driven by Grayscale’s GBTC, this time eight different ETF providers saw net withdrawals.
- Technical resistance trigger: The price reached the 1.618 Fibonacci extension level—a historically reliable area for market tops.
While these developments suggest growing profit-taking and caution among institutional investors, they don’t necessarily signal the end of the bull market. In fact, such pullbacks often serve as breathing room before another upward surge.
Technical Analysis: Mixed Signals on the Weekly Chart
The weekly BTC/USDT chart presents a complex picture—offering both bearish warnings and bullish continuations.
On the bearish side:
- The Relative Strength Index (RSI) shows bearish divergence, meaning price made a higher high while momentum weakened.
- Bitcoin was rejected at the 1.618 external Fibonacci retracement level, a zone often associated with cycle peaks.
- A large red weekly candlestick is forming, indicating strong selling pressure near the top.
On the bullish side:
- The MACD (Moving Average Convergence Divergence) remains positive and continues to rise, with no divergence yet.
- The overall uptrend began after Bitcoin broke out of a 217-day descending parallel channel in November—an event that historically precedes major rallies.
- The entire rally from the breakout to the peak lasted just 63 days, which is relatively short for a full bull cycle climax.
These conflicting signals suggest that while short-term weakness is evident, the broader trend may still have room to run. The upcoming weekly close will be crucial: a strong reversal candle could reignite bullish momentum, while another red candle may confirm the start of a deeper correction.
Elliott Wave Outlook: Is This Wave Four or the Final Top?
One of the most compelling frameworks for analyzing Bitcoin’s long-term structure is Elliott Wave Theory. According to this model, Bitcoin is currently in Wave Five—the final phase of a larger impulse wave that began in December 2022.
There are two primary interpretations:
Scenario 1: Top Is In
Wave Five has already extended to match the combined length of Waves One and Three. This symmetry suggests the rally could be complete, especially given the confluence of technical resistance and weakening momentum.
Scenario 2: One More High Ahead
A closer look at sub-wave structures reveals that Bitcoin may still be forming Wave Four, a corrective phase that typically precedes a final upward thrust (Wave Five). If this interpretation holds, we could see:
- A retracement down to $85,825, aligning with the 0.382 Fibonacci support level.
- A sideways consolidation pattern (such as a triangle), which often precedes powerful breakouts.
- A final surge toward $130,000–$140,000, potentially completing an extended fifth wave.
Given that Wave Two was a deep correction, the principle of alternation suggests Wave Four should be shallower and more time-based—favoring a range-bound consolidation over a steep crash.
What’s Driving the Correction?
Several macro and on-chain factors contributed to the recent downturn:
1. Profit-Taking After Historic Rally
Bitcoin surged over 120% since August 5, creating massive unrealized gains. As prices approached six figures, many long-term holders likely chose to lock in profits—especially through ETF channels.
2. Institutional Outflows
With $680 million exiting spot Bitcoin ETFs in a single day, institutional sentiment appears cautious. However, it's important to note that outflows don't always mean permanent selling—some investors may be rebalancing portfolios or moving assets to self-custody.
3. Market Psychology and FOMO Exhaustion
After months of rising prices and media hype, retail momentum may be slowing. Search trends, social volume, and derivatives activity have shown signs of plateauing—a classic sign of near-term topping behavior.
FAQs: Your Bitcoin Questions Answered
Is Bitcoin’s bull run over?
Not necessarily. While the recent correction is significant, historical cycles show that major tops are usually formed after multiple retests of highs—not after a single sharp drop. With key indicators like MACD still supportive and long-term demand intact, the bull market may merely be pausing.
How low could Bitcoin go in this correction?
Based on Elliott Wave analysis, a dip to **$85,825** (the 0.382 Fib level) is possible if Wave Four unfolds as expected. However, strong support exists around $90,000–$92,000, where previous resistance now acts as support.
Could Bitcoin reach $140,000?
Yes—many technical models suggest a final blow-off top between $130,000 and $140,000 before a full cycle peak. This would align with extended Wave Five projections and historical boom-bust patterns.
Are ETF outflows a red flag?
Only if sustained. Short-term outflows often occur after price peaks but don’t always lead to prolonged bear markets. Monitoring weekly flows over the next few months will provide clearer direction.
What should traders watch next?
Key levels to monitor:
- Immediate support: $95,000
- Major support: $85,825
- Resistance: $108,353 (all-time high)
Also watch for reversal candlestick patterns on the weekly chart and any resumption in ETF inflows.
When might altcoins start performing again?
If Bitcoin enters a sideways consolidation phase (like a triangle pattern), capital may rotate into altcoins—potentially triggering a minor altseason. Historically, such rotations occur when BTC dominance stabilizes after a major run-up.
Final Thoughts: Correction or Capitulation?
The current Bitcoin price action reflects a classic late-stage bull market dynamic: euphoric highs followed by sharp corrections fueled by profit-taking and sentiment shifts.
While technical resistance at $108,353 held firm for now, the underlying structure still supports the possibility of **one final upward leg** before a full cycle top forms. Whether that takes price to $120,000 or $140,000 depends on continued demand and macro conditions.
For now, patience and risk management are key. Traders should avoid panic selling while remaining alert to confirmation signals—both technical and on-chain—that could indicate whether this dip is a buying opportunity or the beginning of a bear market.
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