Bitcoin rebounds after hitting bottom! After plunging to $84,000, it recovers. Will the trend reverse next week?

On December 19, Bitcoin temporarily plummeted to the critical support level of $84,000 before rebounding strongly. It is now back up to around $87,900. The market fear and greed index stands at 17, indicating extreme fear, but technical indicators show bulls are defending a key line of defense.

Bitcoin Holds the $84K Critical Support, Bulls Launch Counterattack

On December 19, Bitcoin experienced a rollercoaster day. During trading, it once dropped to $84,544, approaching the critical support level of $84,000 warned about by technical analysts at Bitcoin Magazine this week. This level is seen as a decisive battleground for bulls and bears; if broken, it could trigger a chain of sell-offs, pointing toward the $72,000 to $68,000 range.

However, bulls showed resilience at a critical moment. After hitting the low, Bitcoin quickly rebounded and is now around $87,900, with a daily increase of about 4%. This rebound indicates that despite extreme market panic, strong buying support remains near $84,000.

As of press time, Bitcoin trading volume reached $56 billion, with a market cap of $1.69 trillion. According to data from Bitcoin Magazine Pro, circulating supply is approximately 19.96 million coins, with a total supply of 21 million, over 95% mined. This price correction has lasted two months, but today’s rebound may mark the formation of a short-term bottom.

The market fear and greed index remains at 17/100, indicating extreme fear. Historical data shows that when the index is at this level, Bitcoin is often severely undervalued, and contrarian investors tend to find buying opportunities. Today’s price rebound seems to confirm this pattern.

CPI Data Boosted Market, but the Rally Is Unsustainable

Earlier this week, Bitcoin briefly rose to around $89,000 after the US released moderate inflation data. November’s CPI year-over-year increase was 2.7%, below market expectations; core CPI dropped to 2.6%, the lowest since early 2021.

This data temporarily boosted market confidence, with traders interpreting it as a signal that the Federal Reserve might shift to easing policies by 2026. CME FedWatch data shows that expectations for a rate cut in March have slightly increased. Bitcoin thus rebounded from around $86,000 to challenge $89,000.

However, this rally was short-lived. After failing to break above the $90,000 psychological level, prices quickly fell back, eventually dropping near $84,000. This “sharp rise and fall” pattern has repeatedly appeared in recent markets, indicating that prices are in a fierce tug-of-war between bulls and bears.

Three Major Factors Limit the Rebound Space

ETF Capital Continues to Outflow: US spot Bitcoin ETFs have recently experienced net redemptions, weakening institutional support and limiting sustained upward momentum.

Weakening Labor Market: US unemployment rose to 4.6%, a new high since 2021, increasing economic uncertainty.

Technical Resistance Heavy: Above $90,000, there is significant trapped supply, creating heavy selling pressure and restricting upward movement.

Institutional sentiment is a key variable. ETF inflows once drove Bitcoin to record highs in 2024, but as institutional investors reassess risks, this support is fading. Without sustained institutional buying, regaining and holding above $90,000 will face greater challenges.

Is the Current Rebound a Technical Bounce or a Trend Reversal?

(Source: Trading View)

From a technical perspective, the rebound to $87,900 today may be just a technical correction rather than the start of a trend reversal. Bitcoin remains in a consolidation phase, lacking a clear directional breakout. Key resistance lies between $94,000 and $118,000, requiring substantial buying volume for bulls to break through.

In the short term, the $87,000–$89,000 range will be the focus of bulls and bears fighting. If Bitcoin can stabilize in this zone and test the $90,000 level upward, it may signal a bottom has formed. But if it falls below $86,000 again, it could retest support at $84,000 or even dip below $80,000.

Bitwise analysts offer different medium- and long-term views, suggesting Bitcoin may break the historical four-year cycle pattern, with a new high expected in 2026 and reduced volatility. However, such forecasts do not address current short-term pressures, and investors should remain cautious amid ongoing volatility.

For investors, the current position presents both opportunities and risks. The extreme market fear and key support levels offer potential entry points for contrarian investors. But with heavy resistance overhead and lack of institutional backing, blindly chasing the rally could risk another pullback.

A prudent strategy is to adopt a phased accumulation approach. Setting buy plans at key levels like $87,000, $85,000, and $82,000 can help capture rebounds while managing risk. Also, closely monitor ETF capital flows and macroeconomic data changes.

In the coming days, whether Bitcoin can stay above $87,000 will be critical. If bulls can maintain this zone and effectively challenge $90,000, market sentiment may gradually recover. But if it falls below again, a defense battle around $70,000 will be inevitable.