BTC Price Could Hit $20K: 5 Things to Know This Week

Bitcoin (BTC) started the Christmas week in a state of declining price support as BTC's price support thinned and forecasters saw the potential for a sharp decline.

• A "bearish engulfing" pattern on the weekly timeframe has traders concerned about the short-term outlook for the BTC/USD pair.
• The target for a deeper correction could be a return to the old All-Time-High of 74 thousand USD.
• US employment data led a quiet macro week, but markets are still feeling the impact of the Fed's rate hike meeting last week.
• Those looking to get long-term exposure to BTC have a first opportunity to buy in two months, according to data from a dedicated indicator.
• Crypto market sentiment is deteriorating rapidly, but "greed" still reigns.

Bitcoin Suffers "Bearish Engulfing" as Week Closes

After a gloomy week of closing, Bitcoin is struggling to maintain support in the 90 thousand USD range as the holiday season approaches.

Data from TinTucBitcoin and TradingView paints an uncertain picture for BTC price action, with the BTC/USD pair still down 13 thousand USD from last week's All-Time-High.

"Bitcoin has confirmed a Bearish Engulfing candle pattern," renowned trader and analyst Rekt Capital wrote in a recent post on X, this time for the weekly chart.

Rekt Capital warned that the BTC/USD pair has "lost" weekly support, marking the end of a five-week uptrend.

"Bitcoin is showing signs of transitioning into a more extended corrective phase," another post cautioned.

"Any recoveries, if needed, into these old supports could turn them into new resistance to confirm the continuation of the downtrend."

Some have argued for the potential to drop to the old All-Time-High from March at 74 thousand USD.

"In previous cycles, a -30% drawdown has been the standard in bull markets," trader Josh Rager noted in a part of a post on X on December 23.

"Price action is not great currently but not terrible either. Imagine if it dropped to 75 thousand USD right now."

Fellow trader Jelle compared to last year's BTC price action to predict the potential for a rebound after "a few more difficult weeks."

For a glimmer of short-term hope, Charles Edwards, founder of the digital asset fund Capriole, revealed that December 26 is traditionally the highest-performing day of the year for the S&P 500.

"The 26th is the highest-profit day of the year traditionally," he told his X followers along with data from Carson.

"Could an X-mas recovery be coming?"

BTC Price Target in the Short Term is 80 Thousand USD

The holiday period brings new challenges for crypto market participants due to the extended "off-hours" trading time.

The absence of the usual liquidity profiles available on business days can amplify upward or downward moves.

Assessing the overall liquidity landscape across exchanges, renowned trader Mark Cullen currently sees two key levels to watch out for by 2025. One will be painful for the bulls.

"Liquidity is stacked up like Christmas presents under the tree at 115K and below 80K," he summarized on X along with data from the CoinGlass monitoring resource.

"The big question: Which level gets hit first? And will we see a holiday swing where both levels get pierced?"

Here is the English translation, with the content inside <> retained without translation: The accompanying chart shows two areas where liquidation could occur en masse if the spot price reaches there. A drop to the $80,000 level would be a normal market correction compared to previous BTC price cycles. As on-chain analytics firm Glassnode revealed, this cycle's deepest drawdown is typically less volatile than in the past, at -32% (August 5, 2024), with most corrections under -25% from local highs, reflecting spot ETF demand and growing institutional interest, the firm noted in a post on X over the past weekend.

BTC price could drop to $20K in macro liquidity crisis

With a quiet week ahead for macro economic indicators, traders face less risk of asset volatility surprises from unexpected inflation. That said, December 26 will still see the release of initial US jobless claims - an event the crypto markets have proven particularly sensitive to this year. The macro climate, overall, remains uncertain. Last week, the Federal Reserve hiked rates 0.25% as expected while signaling a more dovish stance for 2025. The result has been a sell-off in risk assets including Bitcoin and altcoins, with markets seeing fewer rate cut opportunities in the near term, which could weigh on liquidity. On this topic, trading resource The Kobeissi Letter has spotted another liquidity hurdle for Bitcoin specifically. "In the past, Bitcoin price has closely tracked global money supply with a lag of around 10 weeks," it wrote on X over the past weekend.

"As global money supply hit a record $108.5 trillion in October, Bitcoin price reached an all-time high of $108,000. Over the past two months, however, money supply has decreased by $4.1 trillion to $104.4 trillion, the lowest level since August."

Kobeissi warned that the BTC/USD pair could "pause" in its bull market and even see a more severe correction following. "If the relationship holds, this suggests Bitcoin price could drop to $20,000 in the coming weeks," it continued. On the topic of risk assets in general, Kobeissi added that it expects volatility to "spill over" into the coming week.

Bitcoin DCA signal lights up after two-month hiatus

After a two-month absence, Bitcoin price action has returned to levels that a dedicated buy signal indicator says will be favorable. The so-called Smart DCA tool from on-chain analytics platform CryptoQuant flags when the BTC/USD pair is trading below its short-term realized price. Realized price refers to the composite price at which the supply last moved. Smart DCA uses transactions from one week to one month prior to the observation date to determine relatively lower price levels and, thus, potential buying opportunities. DCA refers to dollar-cost averaging - the practice of buying BTC in set capital amounts at regular intervals. At $95,000, the BTC/USD pair is now in the "favorable area to execute a DCA strategy," CryptoQuant contributor Darkfost wrote in one of this weekend's Quicktake blog posts.

"Using a DCA strategy helps reduce the impact of volatility and mitigate associated risks, making it a prudent approach depending on market conditions," he explained.

"This tool, when used in conjunction with a broader understanding of trends and market sentiment, can provide valuable insights to make informed investment decisions."

"Severe FUD" weighing on sentiment

Bitcoin sentiment may have taken an even bigger hit than price in last week's liquidity flush - but research suggests that could ultimately benefit the bulls. In a post on X on December 22, research firm Santiment revealed what it described as the "highest FUD spiral of the year" among social media users.

Analysis of comments on X, Reddit, Telegram and 4Chan, Santiment calculates that for every four positive comments in the market, there are five negative comments.

"The further cleansing of cryptocurrencies has pushed the crowd psychology of Bitcoin to the most negative statistical point of the year," it wrote in the accompanying commentary.

"Major traders are currently exhibiting severe FUD, and this is good news for those against the trend who know that markets move in the opposite direction of retail expectations."

A chart highlights similar situations in 2024, all coinciding with market recovery.

Meanwhile, the Crypto Fear & Greed Index, which tracks sentiment among traders from various data sources, remains in "Greed" territory.

The index reached a peak of 94/100 on November 22, marking a historically known level of market reversal downwards. On that day, the BTC/USD pair closed around $99,000.

The last time "Greed" was so prevalent among traders was in February 2021.

Compiled by Bitcoin News