Bitcoin Faces Potential 10%-15% Price Drop After Rejection Near $89K Resistance
Key Takeaways
- Bitcoin (BTC) faces a potential 10%-15% correction after failing to break the $89K resistance.
- The 200-day SMA (Simple Moving Average) remains a critical resistance level.
- Traders highlight overbought conditions on the Stochastic RSI, signaling a possible pullback.
- Despite short-term bearish signals, long-term bullish factors like dollar weakness and whale accumulation persist.
Bitcoin’s Rally Stalls at Key Resistance
Bitcoin’s recent upward momentum hit a roadblock as BTC/USD faced strong rejection near the $89,000 mark. After reaching new April highs of $88,874, the cryptocurrency struggled to sustain its gains, sparking concerns of an impending correction.
Data from Cointelegraph Markets Pro and TradingView shows Bitcoin cooling off after failing to break above the 200-day Simple Moving Average (SMA), a historically crucial level for BTC price action.
“Interesting spot. Broke above the Daily 200EMA (Blue) and diagonal resistance. So far, saw a sharp rejection from the Daily 200MA (Purple),” noted trader Daan Crypto Trades in an X post.
The 200-day SMA, which typically acts as support in bull markets, was lost in March amid broader crypto market sell-offs. Since then, Bitcoin has rebounded from five-month lows under $75,000, but traders remain cautious about further downside risks.
Why Traders Expect a Bitcoin Pullback
1. Overbought Stochastic RSI Signals Correction
Trader Roman pointed out that Bitcoin’s Stochastic Relative Strength Index (RSI) is flashing overbought signals—a pattern that has preceded 10%-15% corrections in recent months.
“As we approach horizontal resistance, I wanted to show that the last 4 times stoch RSI has been overbought, we’ve seen a 10-15% correction,” he explained.
With the daily Stochastic RSI peaking at the top of its range on April 22, some analysts believe a short-term pullback is likely.
2. Macroeconomic Pressures Loom
Bitcoin’s price action is also influenced by broader financial markets. Recent downward momentum in the S&P 500 and weakening US dollar strength could contribute to BTC’s volatility.
However, some traders argue that macroeconomic tailwinds—such as record-high global M2 money supply and gold’s bullish breakout—could support Bitcoin’s long-term uptrend.
Bullish Counterarguments: Is the Bottom In?
Despite short-term bearish signals, some analysts believe Bitcoin has already found its local bottom.
Trader Cas Abbe dismissed fears of a “bull trap,” citing:
– Whale accumulation
– Resurgent Coinbase premium
– Macroeconomic catalysts
“I believe that the $74K-$75K zone was the bottom for BTC. Most alts have also bottomed out, and we could see a sustained rally,” he stated.
Final Thoughts: What’s Next for Bitcoin?
While Bitcoin faces short-term resistance near $89K, the long-term outlook remains bullish due to macroeconomic factors and institutional interest. Traders should watch:
– BTC’s ability to hold $85K support
– Daily closes above the 200-day SMA
– Macroeconomic trends (USD weakness, gold correlation)
As always, DYOR (Do Your Own Research) before making investment decisions.
