Bitcoin's Rollercoaster: Key Price Levels to Watch After Recent Highs

Key Takeaways

• Bitcoin surged above $100,000 early this week but has since declined as investors reassess the interest rate outlook for the year.
• A bearish engulfing pattern has formed on the price chart, signaling a halt to the recent rally.
• Key support levels to monitor are around $92,000, $87,000, and $74,000, while important resistance levels are near $100,000 and $106,000.

Bitcoin (BTCUSD) experienced a significant rise above $100,000 earlier this week, but recent days have seen a decline as investors react to stronger-than-expected economic data affecting Treasury yields. This shift is causing downward pressure on risk-on assets such as Bitcoin, with concerns over the Federal Reserve's stance on interest rates.

On Wednesday, spot Bitcoin exchange-traded funds (ETFs) faced their second-largest daily outflows since trading began in January, indicating a cautious approach from institutional investors.

Despite the drop, Bitcoin has more than doubled in value over the past year, with a notable increase of about 33% since November's election, largely driven by expectations of a favorable regulatory environment under the new administration.

As of late Thursday, Bitcoin was trading at $93,500, having pulled back from a weekly high of nearly $103,000 and an all-time high around $108,000 in mid-December.

Bearish Engulfing Pattern Halts New Year Rally

Since reaching its all-time high, Bitcoin has faced significant selling pressure. The formation of a bearish engulfing pattern has interrupted the rally above the $100K mark. Additionally, the relative strength index (RSI) has dropped below 50, indicating weakening buying momentum.

Key Support Levels to Watch

The first support level to watch is around $92,000, where buying interest may emerge due to previous lows and the lower trendline of a potential descending channel. If Bitcoin falls below this level, it could drop to $87,000, where bulls may look for entry points. A decisive close below this level could lead to a decline to approximately $74,000. Longer-term investors might consider accumulating in this range near the 200-day moving average.

Important Resistance Levels to Monitor

If bullish momentum returns, Bitcoin may attempt to breach the psychological $100K mark, which could act as overhead resistance. A breakthrough above this level could lead to a retest of the significant $106,000 level. Traders who bought during the recent pullback may look to lock in profits around this area.