Bitcoin Price Plunge: Is This Indicator a Sign of Hope for Investors?

Bitcoin (BTC) has taken a sharp dive following the latest Federal Reserve announcement, dropping to around $96,000 – a move that has activated a significant contrary indicator often associated with the end of price pullbacks.

On Wednesday, the Federal Reserve made headlines by cutting the benchmark borrowing cost, but the update included a shocking revision of its rate cut plans for 2025, reducing the projected cuts from four to just two. The central bank made it clear that it will not engage in any government schemes aimed at creating a strategic Bitcoin reserve, adding uncertainty to an already volatile market.

As a result of the Fed's announcement, Bitcoin has plummeted over 8%, reaching lows near $96,000. As of now, it is trading around $97,500, which represents nearly a 10% decrease from the all-time high of $108,266 that it achieved just earlier this week, as reported by CoinDesk.

This recent downturn has allowed the 50-hour simple moving average (SMA) to dip below the 200-hour SMA, confirming a bearish crossover. Traditionally, this pattern suggests that further price declines could follow, though it has not held the same weight during the ongoing bullish trend.

Throughout Bitcoin's impressive post-U.S. election rally, from $70,000 to highs above $100,000, several pullbacks appeared, each marked by similar SMA-crossovers. The latest one has ignited optimism among some investors who are hopeful for another rally that could see Bitcoin break into six-figure territory once again.

However, any upward movement is likely to face resistance around the $10,600 mark, defined by a descending trendline that tracks the current drop. Should Bitcoin manage to overcome this resistance, it could pave the way for new record highs.

It is crucial to keep in mind, though, that not all trading patterns play out predictably. The bullish crossover could falter, resulting in further declines. A critical watchpoint will be if Bitcoin falls below the overnight low of $96,000, as that might expose a swing low around $91,000 recorded on December 5.

With the crypto market's unpredictable nature, investors are left with mixed feelings—will this contrary indicator signal a rebound, or is it the start of a deeper decline? Only time will tell, but savvy traders might want to prepare for both scenarios!