Bitcoin Price Dips Below Key Level: Is a Major Correction Imminent?

TLDR

• Bitcoin price dropped below its 365-day moving average, signaling potential further downside risk.
• On-chain data shows that Bitcoin holders who bought between 6 and 12 months ago are now facing unrealized losses.
• The 365-day moving average has acted as a key support level for Bitcoin since late 2023.
• Bitcoin price is testing critical support zones between $92,000 and $95,000.
• A deeper correction could push Bitcoin price into the $85,000 to $90,000 range, with the potential for further losses.

Bitcoin (BTC) price fell to $94,000 on Friday, raising concerns about further liquidation and the possibility of a deeper correction. The price drop pushed Bitcoin below its 365-day moving average, a key level that has supported its bull cycle. Experts worry this could signal the start of a broader downturn, especially as on-chain data suggests growing pressure on recent buyers.

Bitcoin Faces Downside Pressure After Moving Average Breakdown

Bitcoin price’s recent drop below the 365-day moving average is raising alarms. This level has acted as a primary support since late 2023. The breakdown suggests Bitcoin could face a deeper correction if it fails to reclaim this key threshold.

Bitcoin price briefly dipped below the 365-day average, now near $102,000, on Friday. This movement echoes the pattern seen in December 2021 when repeated rejections at this level marked the start of the 2022 bear market. With liquidity conditions remaining unstable and long-term holders distributing assets, the breakdown heightens concerns of a larger correction.

Bitcoin price is currently navigating a precarious situation. It has struggled to regain the 365-day moving average, heightening fears of a deeper sell-off. If this trend continues, Bitcoin could be on the path toward sub-$90,000 levels.

On-chain data reveals troubling signs for Bitcoin price. The realized price for holders who bought between six and 12 months ago is near $94,600. This group, which accumulated during the ETF-driven rally, is now at risk of losses as Bitcoin’s price drops below their entry points.

Historically, when the Bitcoin price falls below the cost basis of this group, it often triggers capitulation. The 6–12 month cost basis has previously marked the first significant support during market corrections. As the Bitcoin price continues to test this threshold, the pressure on these holders could lead to further downside.

This trend has been observed in previous cycles. Bitcoin price dropped below this cost-basis band in both 2017–2018 and 2021–2022, leading to prolonged declines. With Bitcoin price now approaching this critical zone, many analysts are warning of the possibility of a deeper correction.

Three Key Support Zones for Bitcoin Price

Bitcoin price is facing three major support zones as the market corrects. The first support lies between $92,000 and $95,000, which aligns with the 6–12 month cost basis. If Bitcoin price holds above this level, it could limit the extent of the current decline.

A more substantial correction could push the Bitcoin price toward the $85,000-$90,000 range. This would represent a typical 25%–30% decline in a mid-cycle correction. If Bitcoin price falls into this range, it would test the next significant level of support.

The bearish scenario suggests Bitcoin’s price could even fall further. If ETF outflows increase and broader macro conditions worsen, Bitcoin could retest the $75,000 to $82,000 zone. A drop to these levels would represent a 35%–40% pullback from the current cycle high.

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