Why is Bitcoin Falling?

Since the beginning of the week, the price of Bitcoin price has dropped nearly 10%, sparking concerns among traders and investors. However, rather than giving in to negative emotions, it’s essential to view this decline as a potential opportunity

In today’s analysis, we’ll break down the key factors behind Bitcoin’s downturn and explore how you can use this market development to strengthen both your long-term investments and short-term trading capital.

Weekly time frame analysis

BTCUSD - 1 Week Time Frame

When analyzing financial markets, we consistently observe three key phases: rallies, declines, and corrections.

Each of these phases naturally triggers emotional responses, as emotions are an inherent part of human nature. A price decline often fuels uncertainty, prompting traders to ask: “Should I sell? Is it time to exit the market?”

However, successful long-term traders have mastered the ability to manage these emotions by following a clearly defined trading system. This system accounts for all possible scenarios and guides decision-making in each market phase, ensuring rational actions rather than emotional reactions.

Bitcoin’s price movement in 2024 serves as a prime example of this cycle. After an impulsive bullish rally, the market naturally entered a corrective phase, often retracing to the 0.5 Fibonacci level—commonly referred to as the Discount Zone.

In the attached chart, we can see that the current price activity closely mirrors that of 2024, where a strong rally has transitioned into a correction phase.

To further contextualize the decline, we’ve identified a key support zone that has yet to be tested and balanced by price action. This zone not only explains the ongoing retracement but also serves as a critical factor in maintaining a bullish outlook.

Bitcoin price target

a) Bullish Scenario: As long as Bitcoin’s price remains above the lower boundary of the support zone on the weekly timeframe, traders can confidently hold existing buy positions. Additionally, after confirmation on lower timeframes, new buy positions can be considered.

b) Bearish Scenario: If the price fails to hold the support zone and closes below it, the probability of further declines will significantly increase.

Ultimately, understanding market cycles and key technical levels allows traders to navigate volatility with confidence, avoiding impulsive decisions driven by fear.