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Bitcoin has experienced significant price fluctuations over the past few days, mainly influenced by macroeconomic trends and market fundamentals.
The price of Bitcoin plummeted below $99,000 following the Federal Open Market Committee (FOMC) meeting and Federal Reserve Chairman Jerome Powell's speech.
However, the leading cryptocurrency quickly rebounded, rising to $104,000 earlier today before settling at $100,573 at the time of writing. This is a 3.4% decrease compared to the past day, and represents a decrease in market capitalization valuation of approximately $67 billion.
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Foreign exchange trading hits record low
Amid this price performance, a CryptoQuant analyst known as Wu Mingyu provided insight into Bitcoin market activity, highlighting a decline in trading volumes on the exchange.
Wumingyu said historical data suggests there is a correlation between spikes in trading volume and large price movements. For example, peaks in currency trading coincided with Bitcoin price spikes in 2017 and 2021.
Bitcoin exchange trading. |Source: CryptoQuant
However, recent data shows a notable decline in trading volumes on both spot and derivatives exchanges, reflecting reduced trading activity compared to the previous year.
According to analysts at CryptoQuant, this decline could indicate a “decline in market participation” and could signal “a period of consolidation or reduced volatility” in the short term.
Bitcoin key support levels and technical insights
Market intelligence platform IntoTheBlock highlighted an important support zone forming just below the $100,000 mark. Data shared by the platform reveals that over 1.45 million BTC was accumulated at an average price of $97,500.
Bitcoin deposits and withdrawals regarding prices. |Source: Into the Block
This accumulation establishes an important demand zone, which may act as a “buffer” against further price declines. The importance of this level is that it can provide a basis for price stability, especially as Bitcoin weathers the current market correction phase.
It is suggested that below this zone could trigger further downward pressure, while above this zone could facilitate recovery efforts.
Meanwhile, from a technical perspective, insights shared by market analyst Satoshi Wolff highlight the important nature of Bitcoin's current price level. The cryptocurrency recently tested the $100,000 support in line with the 100-day exponential moving average (EMA).
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This level is very important as it combines technical indicators with psychological importance. The Moving Average Convergence Divergence (MACD) indicator is showing bearish momentum, while the Relative Strength Index (RSI) is approaching oversold territory, indicating a possible price reversal.
BTC price is rising on the 2-hour chart. Source: BTC/USDT on TradingView.com
Wolff suggests that traders are watching for a confirmed breakout above $104,000 or below $100,000, with volume confirmation being key to verifying either.
📊 $BTC Analysis: The chart shows a recent pullback after a strong uptrend, suggesting potential profit-taking. Price is testing the 100,000 support along with the 100 EMA, which is an important level to watch.
If this trend continues, there is a possibility of a rebound towards the resistance at 104,000. MACD… pic.twitter.com/smLaqsr2Tz
— Satoshi Wolf (@SatoshiWolf) December 18, 2024
Featured images created with DALL-E, TradingView charts
