25% Bitcoin Price Rally Could Follow Today’s Correction If History Repeats

Bitcoin prices fell to $103,300 as traders reduce risk ahead of the FOMC decision. Technical analysis indicates potential support between $102,000 and $104,000, with significant profits being realized by mid-term holders. Historically, similar scenarios have led to 18-25% price rallies, suggesting a target of $130,000 by Q2’s end could be realistic. However, if the price dips below $98,300, it may signal a more serious correction.

Bitcoin’s price has dipped to around $103,300 as traders look to manage their risk ahead of tomorrow’s critical Federal Open Market Committee (FOMC) meeting and its interest rate decision. This drop of $103,500 is drawing some attention, particularly as the market had a bearish weekly candle close. Plus, global tensions, notably the Israel-Iran conflict, have added a layer of uncertainty, pushing many into a risk-off approach.

Swissblock’s Bitcoin Vector, a market aggregator, points out that this decline in Bitcoin isn’t simply because of macroeconomic factors. It’s aligning with seasonal trends and a slowdown in onchain network growth, indicating a retreat in spot demand. A staggering $434 million worth of BTC futures has been liquidated in just the last day, highlighting that this movement is primarily driven by leverage, with traders cautious about making fresh investments right now.

Meanwhile, the Bitcoin Coinbase Premium Index, which looks at price differences between Coinbase and Binance, has mostly remained in the green throughout June, suggesting that US investors are still showing solid demand for Bitcoin. Unfortunately, the cautious sentiment across the market means this demand hasn’t been enough to push prices higher.

Profit-taking from what’s termed “mid-cycle holders”—those who have held their investments for six to twelve months—has also played a role. These holders cashed in on $904 million in profits on Monday, which was a significant 83% of the total realized gains. This behavior indicates a change in market sentiment as shorter-term investors are securing profits amid recent highs, leaving long-term holders somewhat inactive.

On the brighter side, long-term holders (LTHs) are still largely avoiding large transactions. Axel Adler Jr., a Bitcoin researcher, argues that LTH activity typically signals bullish trends, which holds promise for the future of Bitcoin prices.

Interestingly, indicators like the MVRV Z-score, which assesses Bitcoin’s true value, show that BTC is still undervalued. This, combined with positive trends in Coin Days Destroyed (CDD), suggests the profit-taking seen is more measured than frantic. Historical patterns suggest that previous setups like this have led to price rallies between 18-25% within six to eight weeks, hinting at a possible surge towards a $130,000 price target by the end of the second quarter.

From a technical angle, Bitcoin appears to be nearing a short-term bottom in the $102,000 to $104,000 range, particularly because of a significant liquidity pocket and an important historical order block.

Another layer to this analysis comes from the Bollinger Bands. These indicators show a potential for volatility increases. As we approach the $102,000 mark, a quick rebound might be expected due to its closeness to the central band, roughly around $106,000, which could present dynamic resistance. A solid close above $106,748 could pave the way for bullish movement towards $112,000. However, if Bitcoin falls below $100,000, it could foretell a deeper sell-off, potentially hitting $98,000.

Data from Alphractal highlights that $98,300 might serve as a crucial support level, especially for short-term holders still in profit. Moving beneath this figure could shift market sentiment towards a more bearish trend.

Please note, this article doesn’t provide investment advice. All trading carries risk, and it’s vital for readers to do their own research before making decisions.