Bitcoin (BTC) Post-Fed Price Drop to $96,000 Activates Contrary Indicator That Has Historically Marked the End of Pullbacks

The losses have caused the 50-hour simple moving average (SMA) to dip below the 200-hour SMA, confirming a bearish crossover.

Bitcoin (BTC) dropped to $96,000 on Wednesday after the U.S. Federal Reserve signaled fewer-than-expected rate cuts for 2025. At least one contrary indicator suggests that the cryptocurrency is now due for a bounce.

Bitcoin fell sharply on Wednesday after the U.S. Federal Reserve signaled it will cut the benchmark borrowing cost only twice next year, down from four it projected in September.

The central bank also said it’s not interested in participating in a potential government plan to build a strategic BTC reserve.

Bitcoin dropped below $97,000 on major cryptocurrency exchanges after hitting a record high of $108,266 early this week, a gain of over 35% since the beginning of 2024. At current levels, the world’s largest cryptocurrency is up about 20% year-to-date.

The sharp pullback from the record highs has now caused the 50-hour simple moving average (SMA) to dip below the 200-hour SMA, confirming a bearish crossover on the short-duration price chart.

The pattern suggests that the ongoing pullback could evolve into a deeper one, although the bearish simple moving average (SMA) cross has failed to live up to its reputation during the recent bull run. Bitcoin has experienced a few pullbacks during its post-U.S. election rally from $70,000 to over $100,000, and each of these dips has ended with a bearish crossover of the 50- and 200-hour SMAs.

The latest crossover, therefore, offers hope to bulls expecting a renewed move into six figures above $100,000. A potential bounce could face resistance near $10,600, a level identified by the descending trendline, representing the recent price drop. A violation there would open doors for record highs.

It's important to remember that patterns don't always play out as expected, and the contrary indicator discussed above may fail, potentially leading to a deeper drop. The first sign of trouble will be if prices move below the overnight low of $96,000, which could expose the swing low of around $91,000 recorded on Dec. 5.