Bitcoin’s market correction has worsened as the cryptocurrency extends its losses, setting the stage for further challenges as the year draws to a close. The once-thriving market for Bitcoin, which hit an all-time high of over $108,000 on December 17, has seen a significant pullback of approximately 12%. The recent market downturn has triggered concerns, and analysts are increasingly suggesting that Bitcoin could face a prolonged period of price correction.

The Current Struggles and Ongoing Correction

Bitcoin, after a period of consecutive gains, faced a steep 15% drop last week from its peak price of $108,000, falling to a low of $93,810. As of this week, Bitcoin has shown signs of struggling to regain its previous high, remaining below the $100,000 mark. Despite brief recoveries, the asset has continued to slip, failing to achieve a strong bounce similar to its previous corrections. The continued downturn has led to a “bearish engulfing” weekly candle pattern, meaning all of the recent gains have been wiped out.

Crypto analyst Rekt Capital suggests that Bitcoin is transitioning into what could be a multi-week correction, a pattern observed in previous market cycles. “Bitcoin is showing increasing signs of entering a more prolonged correction phase,” Rekt Capital said, pointing out that historically, this kind of correction often happens during specific phases in Bitcoin’s market cycles.

The Role of Federal Reserve’s Stance and Market Sentiment

Several factors have contributed to the current correction, with one of the key elements being the Federal Reserve’s cautious outlook on interest rates. In the middle of December, the Fed’s Chairman Jerome Powell made hawkish remarks about fewer expected interest rate cuts for 2025. These comments were perceived negatively by the market, especially after the optimism spurred by Donald Trump’s presidential victory in November, where pro-crypto policies initially lifted Bitcoin’s price. Powell’s comments have led to a more bearish outlook, driving investors to become more cautious and retreat from their bullish positions.

The uncertainty surrounding the Fed’s policies, combined with the broader market sentiment, has led to growing fear, uncertainty, and doubt (FUD). As reported by various crypto analytics platforms, the negative sentiment has reached its lowest point this year, with many traders opting to pull back from the market. Despite this, Bitcoin remains up over 40% from the time of Trump’s win, a testament to its overall resilience despite the ongoing challenges.

Bitcoin’s Historical Corrections and Market Cycles

Bitcoin’s price correction, while concerning, is not unprecedented. In fact, it mirrors patterns seen in previous cycles. According to Rekt Capital, Bitcoin’s price history shows that week eight of its price discovery phase tends to be a corrective week, leading to short-term losses. This pattern occurred during Bitcoin’s 2017 market cycle as well, where it experienced a correction similar to the current one during a comparable week in the cycle.

However, Rekt Capital notes that once Bitcoin navigates through these typically corrective weeks, the price usually finds a bottom and begins a recovery phase. “Once BTC clears the corrective weeks, the retrace tends to get close to a bottom,” he explained, suggesting that the asset could soon enter a phase where prices stabilize and begin to recover.

The Importance of Support Levels and Potential for Further Losses

For Bitcoin’s price to avoid further decline, it is critical that it holds the $90,000 support level. Crypto trader and analyst Sean McNulty noted that maintaining this level is crucial for Bitcoin to avoid triggering further liquidations, which could push the price lower. If Bitcoin fails to maintain this level, it could drop to as low as $70,000, where little support exists between the current level and that price point.

The next few days could be pivotal for Bitcoin, as it faces significant pressure from both macroeconomic factors and internal market forces. As David Lawant from crypto prime broker FalconX explained, the low-liquidity environment at year-end could lead to even more volatility, especially with significant options expiry events slated for December 27. With nearly $18 billion in Bitcoin and Ethereum options contracts expiring, the market is likely to experience heightened volatility during this period.

Altcoin Movements Amid Bitcoin’s Struggles

While Bitcoin faces challenges, some altcoins have seen minor recoveries. Solana (SOL) gained 2.2%, rising to $186, and Chainlink (LINK) saw a 5.1% increase, reaching $23. Other altcoins, such as Toncoin (TON) and Stellar (XLM), also made minor gains, demonstrating that while Bitcoin struggles, other projects can offer some respite to investors.

The Road Ahead for Bitcoin

Bitcoin’s price correction is far from over, and the near-term outlook remains uncertain. However, historical trends suggest that Bitcoin could stabilize after completing this correction phase, potentially setting the stage for another upward cycle. Investors are advised to remain cautious, as further volatility may be on the horizon, especially with the end-of-year factors in play. The $90,000 support level is crucial for Bitcoin’s price movement in the coming weeks, and breaking below it could trigger more severe losses. Yet, with its track record of resilience, Bitcoin’s future remains bright for long-term holders.