Bitcoin Could See Double-Digit Drop: Technical Analyst Predicts Price Plunge to $84,500

Bitcoin Could See Double-Digit Drop: Technical Analyst Predicts Price Plunge to $84,500Katie Stockton, founder of independent research provider Fairlead Strategies, says Bitcoin may face a double-digit price drop due to technical signals indicating the recent price surge is "overbought." In a report to clients on Tuesday, the veteran technical analyst predicted further softening in the near term, despite Bitcoin briefly breaking above $100,000 earlier this week

Bitcoin Could See Double-Digit Drop: Technical Analyst Predicts Price Plunge to $84,500

Katie Stockton, founder of independent research provider Fairlead Strategies, says Bitcoin may face a double-digit price drop due to technical signals indicating the recent price surge is "overbought." In a report to clients on Tuesday, the veteran technical analyst predicted further softening in the near term, despite Bitcoin briefly breaking above $100,000 earlier this week.

Stockton forecasts Bitcoin will find support around $84,500, implying a 13% decline from current levels in the next selloff. She added that a secondary support level might exist at $73,800, with a potential drop of up to 25% if the selloff exceeds expectations.

"Bitcoin is bouncing, but we anticipate the bounce will soon fade, with highs below the December peak," Stockton stated. She noted that "Bitcoin is in an active overbought downtrend based on the weekly stochastic, while the daily stochastic just gave an overbought signal, so we see limited upside in the near term."

Despite this, Stockton expressed long-term bullishness on Bitcoin, citing strong underlying fundamentals that could underpin its price throughout 2025.

Bitcoin's price has been highly volatile since the US presidential election, with cryptocurrency traders closely monitoring potential Federal Reserve interest rate cuts and a more crypto-friendly policy from the new administration fueling bullish sentiment.

Perhaps most exciting is the possibility of the US establishing a Bitcoin national strategic reserve under a Trump administration. This has also spurred interest from other countries in including Bitcoin in their strategic reserves, particularly amid heightened economic uncertainty and challenges to traditional financial systems, with Bitcoin seen as a potential diversification tool.

On Tuesday, Ale Michl, governor of the Czech National Bank (CNB), told CNN Prima News that the bank is considering a small Bitcoin purchase as part of its foreign exchange reserve diversification strategy, though he stressed it wouldn't be a significant investment. The decision would require approval from all seven members of the CNBs board. Janis Aliapulios, an advisor to the CNB, stated that there are currently no plans to incorporate crypto assets into reserves, but Michl didn't rule out future discussions.

Meanwhile, the CNB will continue its diversification plan through gold purchases, aiming to increase gold reserves to 5% of total assets by 2028.

Stockton's prediction is based on technical indicators suggesting the current Bitcoin price surge may be unsustainable. The stochastic oscillator, a commonly used indicator in technical analysis, measures how overbought or oversold an asset is. High stochastic readings often indicate an asset's price has risen excessively and may be due for a correction.

Stockton's forecast isn't isolated. Many analysts share concerns about Bitcoin's short-term outlook. Some believe the price could fall further, potentially even below the $84,500 support level.

However, others remain optimistic about Bitcoin's long-term prospects. They highlight Bitcoin's decentralized, censorship-resistant nature and its inherent long-term value. They point to its limited supply and increasing adoption by institutional investors.

Stockton's prediction underlines Bitcoin's volatility. Its price is susceptible to various factors, including market sentiment, regulatory policies, and technological developments. Investors should exercise caution with high-risk assets like Bitcoin and invest according to their risk tolerance.

While Stockton's prediction suggests a potential short-term downturn, her long-term outlook remains positive. She believes strong underlying fundamentals will support Bitcoin's price appreciation in the coming years.

The Czech National Bank's consideration of including Bitcoin in its foreign exchange reserves reflects growing global interest in cryptocurrencies. More countries and institutions are recognizing Bitcoin's potential as a diversification tool.

However, the CNB's decision also highlights the complexities involved in incorporating cryptocurrencies into national reserves. The CNB needs to carefully weigh Bitcoin's risks and rewards, ensuring its investment decisions align with its overall financial strategy.

The CNB's plan to raise its gold reserves to 5% of total assets by 2028 demonstrates its active pursuit of diversification. Gold is a traditional safe-haven asset, often used for hedging. The CNB's combination of gold and Bitcoin for reserve diversification reflects a balanced consideration of risk and reward across asset classes.

In summary, Stockton's short-term Bitcoin forecast is cautious, but her long-term outlook is optimistic. The Czech National Bank's consideration of Bitcoin for its foreign exchange reserves underscores the growing importance of cryptocurrencies in the global financial system. Bitcoin's future price trajectory will depend on numerous factors, including technicals, fundamentals, and the regulatory environment. Investors should closely monitor market dynamics and make investment decisions according to their risk tolerance. The Bitcoin market remains volatile, demanding vigilance and timely responses to market shifts. While the long-term outlook is promising, short-term price fluctuations are inevitable.