Bitcoin (BTC) Price Could See a 20%-30% Correction, Which Could Be ‘the Most Bullish Thing’ That Happens to the Asset: Analyst

Bitcoin (BTC) price remains highly volatile, with an analyst suggesting that a well-defined further drop could eventually be bullish for the digital currency.

Cryptocurrency trading analyst Ali Martinez has highlighted that a 20% to 30% correction in Bitcoin (BTC) price would be “the most bullish thing” for the digital asset.

According to Martinez’s analysis, which was shared in an X post on December 27, such a price correction would pave the way for Bitcoin to reach new all-time highs.

“A 20% to 30% correction is the most bullish thing that could happen to Bitcoin,” the analyst stated.

Highlighting Bitcoin's historical price movements, Martinez explained that the coin has typically recorded strong rallies followed by corrections in the range of 20% to 30%. After hitting a bottom during such corrections, Bitcoin has gone on to reach new highs multiple times since 2016.

“This pattern suggests that Bitcoin's current price movement could follow a similar trajectory,” the analysis noted.

At the same time, Martinez also highlighted key price levels that traders should keep an eye on. In his December 27 post, he highlighted that if Bitcoin falls below $92,730, it could enter “free-fall territory.”

“You don’t want Bitcoin to dip below $92,730 — it’s essentially free-fall territory if that level breaks,” he warned.

Using data from the UTXO Realized Price Distribution (URPD) chart, Martinez highlighted a gap in realized price activity between $92,730 and around the $105,000 mark. This gap indicates that a dip below $92,730 could lead to a sharp decline, potentially dropping Bitcoin to the $60,000 zone.

Despite the short-term bearish outlook, Bitcoin has had an impressive run in 2024, adding over $1 trillion in market capitalization. The rally has been fueled by the latest halving cycle and optimism stemming from Donald Trump’s election victory, with his administration planning to implement pro-crypto policies.

Looking ahead, analysts maintain a bullish outlook for Bitcoin, especially with expectations of increased institutional adoption under a pro-cryptocurrency government. In this line, banking giant Standard Chartered predicts that Bitcoin could reach $200,000 by the end of 2024.

Meanwhile, as of press time, Bitcoin is trading at $94,249, down 0.15% in the past 24 hours and up 1.75% on the weekly timeframe. However, the short-term technical setup shows that Bitcoin is still in trouble.

For instance, Bitcoin's current price is below its 50-day simple moving average (SMA) of $94,670, indicating mild short-term weakness.

Furthermore, the Fear & Greed Index at 72 (Greed) reflects optimistic sentiment, while the 14-day relative strength index (RSI) of 44.41 indicates neutral to slightly bearish momentum.

Despite this, Bitcoin remains well above its 200-day SMA at $70,978, maintaining a bullish long-term trend. In the short term, caution is advised as Bitcoin approaches critical support levels at $92,000 and $90,000.