Market turmoil and Bitcoin’s sharp decline
It’s been exactly two months since the crypto world was upended by the 10 October flash crash – a brutal event that wiped out over $370 billion in Bitcoin’s market capitalisation in mere hours, ushering in the latest bearish chapter for the world’s premier digital asset.
The 10 October wipeout occurred just four days after Bitcoin hit a fresh record high of $126,272 on 6 October. It was triggered by President Trump’s surprise announcement of escalating tariffs on Chinese imports, sending shockwaves through global markets.
Yet, while United States (US) equity markets staged a remarkable recovery with the S&P 500 and Nasdaq 100 surging to fresh highs in late October, Bitcoin’s descent was far more protracted and punishing. What followed was a relentless 36% pullback from October’s zenith, culminating in a low of $80,537 on 21 November.
A fragile rebound and looming uncertainty
In a post on X on 23 November, we flagged here the $80,537 low as likely a ‘capitulation low’ and noted that a bounce back to $95,000 appeared reasonable.
This call has played out well, with Bitcoin rallying almost 18% from that low, bolstered by dovish remarks from the Federal Reserve (Fed) and soft economic data, which has the market widely expecting a 25 basis point (bp) rate cut at tomorrow’s Federal Open Market Committee (FOMC) meeting.
The question now becomes whether the rally can continue, bringing festive cheer to crypto traders, or whether it is set to turn lower. To answer this, we are closely watching the technical backdrop outlined below.
Bitcoin technical analysis
The rally from the 21 November $80,537 ‘capitulation low’ is lacking impulsive qualities and instead is displaying corrective qualities, which at this point suggests the rally is countertrend (Wave IV within the Elliott Wave framework).
Essentially, this suggests that while Bitcoin remains below the $95,000 – $100,000 resistance zone, the risks are for a turn lower and for a retest and break of the $80,537 low (for Wave V), towards the Liberation Day lows at $75,000.
It is important to note that if Bitcoin first breaks above resistance at $95,000 – $100,000 and then above the 200-day moving average at $109,000, it would shift the landscape in favour of a retest of the $126,272 high.