How low can the price of Bitcoin drop?

Author: Yashu Gola, CoinTelegraph; Compiled by: Deng Tong, Golden Finance

Bitcoin prices fell more than 17.5% in a week after hitting a new record high of around $73,800. As of March 20, it had hit a two-week low of $60,760.

BTC/USD daily price chart. Source: TradingView

The decline in Bitcoin prices coincides with expectations that the Federal Reserve will maintain its key interest rate in the existing 525-550 basis points (bps) range. Additionally, continued withdrawals from Bitcoin exchange-traded funds (ETFs) are adding to downward pressure on its price.

Let’s discuss how low Bitcoin prices can go during an ongoing correction cycle.

BTC price may fall below the $60,000 support level in March

The current correction in Bitcoin’s bull run could push it below the $60,000 threshold by the end of March.

Notably, BTC could drop towards the 50-day exponential moving average (50-day EMA; red wave in the chart below) around $58,780. This EMA wave support helps limit BTC’s bull correction in January 2024.

BTC/USD daily price chart. Source: TradingView

The 50-day exponential moving average (EMA) is also aligned with Bitcoin’s horizontal support around $59,310. After testing this level on March 5, the price surged 24.5%.

Bitcoin fractal price is $40,000 before halving

Market analyst Rekt Capital said that Bitcoin price is likely to continue its bullish correction to $40,000.

Rekt Capital’s pessimistic forecast focuses on Bitcoin’s price trends ahead of the halving. The analyst highlighted the current price correction and compared it to the pattern observed before the previous two halvings. From a fractal analysis perspective, Bitcoin is now in the “danger zone” and is expected to extend the correction towards ascending trendline support near $40,000.

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BTC/USD weekly price chart. Source: TradingView

Four years ago, Bitcoin’s price experienced a roughly 50% retracement in the months leading up to the 2020 halving, which was greatly exacerbated by the pandemic in March This downturn. Nonetheless, it stabilized around $10,000 for the remainder of the halving year, setting the stage for a bull recovery in 2021.

Bitcoin price performance before and after halving in 2016 and 2020. Source: TradingView

Similarly, Bitcoin experienced a 33% correction around the 2016 halving, but recovered at the end of the year, eventually entering a bull run in 2017 that peaked at $20,000.

According to fractal analysis, Bitcoin’s ongoing price correction may eventually exhaust itself, followed by a bullish reversal to new record highs, as shown below.

BTC/USD two-week price chart. Source: TradingView

Fibonacci fractal shows potential decline of $50,000

With Meanwhile, Fibonacci retracement levels suggest that Bitcoin may consolidate in the $50,000-60,000 range in the coming days and weeks.

Notably, Bitcoin’s weekly chart reveals interesting price action near Fibonacci retracement levels during bullish reversals. The 0.618 level, also known as the "golden ratio," is particularly noteworthy.

BTC/USD weekly price chart. Source: TradingView

Historically, Bitcoin’s price has often tested the 0.618 level as support after approaching or hitting all-time highs. The red shaded area in the chart above highlights this, reaffirming that Bitcoin’s next support level could be around $50,000.