Bitcoin (BTC) started the new year on a high note after hitting the six-figure mark in 2024. Most observers expect 2025 to be just as notable, with projections putting BTC at $185,000 and above.
However, the path may be as clearly bullish as expected, as the recent price action suggests that sellers are looking to reassert themselves, raising the possibility of a notable price drop in the future.
We’re referring to December’s price action, when bitcoin hit an all-time high above $108,000 but closed the month negative, below $94,000, posting its first monthly loss since August.
The two-way price action formed a bearish reversal candle pattern called “shooting star” on the monthly chart.
The candle features a long upper wick or shadow, which reflects a substantial gap between the high and the open for the given period, along with a small body, which represents a minimal difference between the open and the close. The wick should be at least twice the size of the body and the bottom wick could be tiny at best. In the case of BTC, the top wick is almost four times larger than the body, with a tiny bottom wick.
The shooting star shape shows that buyers initially pushed prices higher, only for sellers to take control near the highs and push prices below the opening level, hinting at a renewed bearish trend in the market.
“Bears are potentially in control,” explains the CMT Association’s Level III textbook, which sheds light on the psychology behind the shooting star pattern.
The shooting star has appeared after a notable uptrend from $70,000 to over $100,000, warning of a possible bearish reversal in the future, which would be confirmed if prices fall below the December low of $91,186. That is the level the bulls must defend.
Note that similar candles with longer top wicks have marked previous bull market highs.
short term pain
The latest shooting star’s cautious message fits into the broader macroeconomic picture, signaling tough times for risk assets. It is mainly due to recent hawkish signals from the Federal Reserve, along with rising Treasury yields and a strengthening dollar index.
However, analysts are confident that the Federal Reserve will reverse its recent decision to signal fewer rate cuts by 2025, ensuring a broader bullish trajectory for BTC and risk assets in general.
My prediction for 2025 is simple: higher. Nothing has fundamentally changed since November 5. “February will be the best performing month as the Fed’s recent hawkish stance still holds back broader markets in the short term,” said trader and analyst Alex Kruger at X.
“The Federal Reserve will go back to dovish at some point in the first quarter, and traders will again price in more cuts,” Kruger said.
