A key contrary indicator is signaling hope for Bitcoin bulls who are anticipating a rebound that could push the cryptocurrency back into six-figure territory.
Following Bitcoin’s (BTC) post-Fed price drop to $96,000, a crucial contrary indicator has emerged, one that has historically marked the end of price pullbacks. On Wednesday, the Federal Reserve lowered its benchmark borrowing rate as expected, but revised its projections for rate cuts, now forecasting only two for 2025, down from the previous estimate of four in September. The Fed also emphasized that it has no interest in supporting any government initiatives to create a strategic Bitcoin reserve.
Since the Fed’s announcement, Bitcoin has dropped more than 8%, hitting a low of $96,000 at one point. As of writing, the cryptocurrency was trading around $97,500, nearly 10% down from its all-time high of $108,266 reached earlier this week, according to CoinDesk data.
This drop has caused the 50-hour simple moving average (SMA) to fall below the 200-hour SMA, signaling a bearish crossover. While this pattern typically suggests that the pullback could deepen, it hasn’t always held true during the recent bull market.
Bitcoin has seen several pullbacks during its post-U.S. election rally from $70,000 to above $100,000, with each dip followed by a bearish crossover of the 50- and 200-hour SMAs.
However, this latest crossover offers hope to bulls who are betting on a return to six-figure prices. A potential bounce back could face resistance around $106,000, which is marked by a descending trendline reflecting the recent price decline. If Bitcoin manages to break through that level, it could set the stage for new record highs.
That said, it’s important to remember that patterns don’t always play out as expected, and this contrary indicator may fail, potentially leading to a deeper drop. The first warning sign of further trouble would be a drop below the recent low of $96,000, which could expose a swing low near $91,000, seen on December 5.
