Fairlead Strategies: Bitcoin's Failure to Hold Above $100,000 May Bring a Correction

Bitcoin's failure to hold above the key psychological threshold of $100,000 recently reached could trigger a correction for the world's most famous cryptocurrency, believes Katie Stockton, a technical analyst and founder of independent analysis firm Fairlead Strategies, writes Business Insider.

In a note published this week, Stockton pointed out that, through the evolution of recent days, Bitcoin has left the historical breakout "unconfirmed," which creates the premises for short-term weakness in the currency. "The short-term momentum is weak and there is a new signal (on the chart) daily counter-trend, which suggests that there are several weeks of digestion before Bitcoin resumes its upward trend," Stockton said.

In the opinion of the technical analyst, the two support levels (areas where there is a higher probability that the decline will stop) are the 20-day and 50-day moving averages. If Bitcoin fails to hold above the first, the second moving average is the next logical support, Stockton says.

Yesterday, at 2:30 p.m., the cryptocurrency was trading at $98,470, according to an index calculated by Investing.com, while the 50-day moving average was at $85,910, which means that, according to Stockton's benchmarks, Bitcoin is likely to fall by about 13%.

However, even though Bitcoin has now failed to consistently break the $100,000 mark, the medium- and long-term momentum is positive, the technical analyst believes. Therefore, any correction in Bitcoin should be short-term, with the upward trend set to continue into 2025.

"Our medium-term indicators point to gains, supporting our optimistic outlook beyond the short term. This suggests that a severe pullback can be avoided," Stockton said. "Our long-term indicators moved higher last month, supporting our positive outlook into 2025," the analyst added, quoted by Business Insider.

Beyond the technical aspects, there are elements of a fundamental nature that make analysts see continued growth for Bitcoin.

Geoff Kendrick, chief global analyst for digital assets at Standard Chartered, believes the world's most popular cryptocurrency could double in price next year. "We would be even more bullish if we saw more rapid uptake of Bitcoin by U.S. pension funds, global sovereign wealth funds, or the prospect of a U.S. strategic reserve fund," Kendrick said late last week, as quoted by Business Insider.

Last year, Kendrick predicted Bitcoin would hit $100,000, largely on expectations that regulatory changes and lower volatility would spur institutional investor inflows. He sees that trend continuing into 2025, driven by increased demand from business software firm MicroStrategy and Bitcoin spot ETFs.

Kendrick expects the rising institutional demand to be fueled by the incoming Trump administration. During the election campaign, the US president-elect made crypto-friendly promises, such as establishing a national Bitcoin reserve, which brought optimism to the industry. In addition, the possibility of purchasing Bitcoin spot ETFs should accelerate demand from institutions that have long-term strategies (which rely only on growth), such as pension funds, according to Business Insider.