The recent decline in Bitcoin has left traders and investors questioning whether the current correction is over or if more downside is likely. Key on-chain metrics and market signals give important clues about where Bitcoin might head next.
Understanding the Bitcoin Price Correction
Market data highlights that Bitcoin’s price correction may not have reached its bottom yet. One crucial indicator tracked by traders is realized loss, which measures the average losses of recent buyers. Crypto analyst Ali Martinez notes that historical cycles show strong buying opportunities when short-term holders face unrealized losses exceeding 37%. As of December 8, this loss level is just 18%, indicating that the market could still experience further declines.
This indicator follows coins held for one to three months. At present, many of these investors are holding positions at a loss, but the pain has not reached extremes previously seen at major market bottoms. Previously, when realized losses surpassed 37%, Bitcoin quickly reversed to bullish momentum, as observed in early 2020, mid-2022, and late 2023.
Market Moves After Federal Reserve Decision
Bitcoin’s price fell following the US Federal Reserve’s December meeting, where interest rates were cut by 0.25%. Fed Chair Jerome Powell suggested another rate cut is possible in 2026, but this was not enough to boost market sentiment. Over the past week, Bitcoin dropped more than 3%, and daily losses have exceeded 2%. The price has fluctuated between $89,623 and $94,177 in 24 hours, showing continued volatility. Since early October’s peak of $126,080, Bitcoin is now down over 28%.
Additionally, the CME Bitcoin futures chart reveals a key technical retest. After escaping a long-term downtrend, prices have returned to a pivotal breakout zone. Such retests are closely monitored by traders to confirm the next trend direction. Notably, the 50-day moving average has crossed below the 200-day moving average, creating a ‘death cross.’ This is the first time since 2022 this bearish signal has appeared on CME futures, raising further concerns among market participants. For more on technical indicators, see Investopedia’s explanation of the death cross.
Traders Monitor Critical Support and Resistance Levels
Analysts are closely watching Bitcoin’s daily price action. According to analyst WZRD, a sustained move above $94,000 may indicate a rebound, while a drop below $89,250 signals continued weakness. For now, Bitcoin is consolidating within a narrow range, with traders waiting for a decisive breakout or breakdown before making bigger moves. Meanwhile, open interest in Bitcoin futures has fallen sharply, dropping from $47.5 billion to $27.5 billion in just two months, reflecting less risk exposure across the market.
Will the Bitcoin Price Correction Go Deeper?
Given that several on-chain and technical signals are not yet at historical extremes, the Bitcoin price correction could have further to run. Market participants should watch key support levels and pay attention to shifts in trading volume, open interest, and loss-tracking indicators to gauge the next move. As always, prudent risk management remains essential in this volatile environment.
