Bitcoin's $99K Resistance: Correction or Rally Ahead?

Bitcoin's price has encountered resistance at the $99,000 level, raising the possibility of a correction. However, a significant rally could be on the horizon. The question remains: when will it hit?

The crypto market as a whole continues to exhibit a relatively bearish sentiment. U.S. spot Bitcoin ETFs experienced net outflows on Thursday, with a substantial 3.78K BTC sold. Blackrock's IBIT fund led the selling with a 1.16K BTC outflow.

Analysts at JP Morgan have warned that Bitcoin and Ethereum prices could experience a sharp short-term decline due to institutional "demand weakness." This weakness is attributed to a decrease in interest from institutional investors using regulated CME futures contracts to gain exposure to these cryptocurrencies.

If Bitcoin's price does fall in the short term, it may simply be a normal market fluctuation. However, geopolitical instability or economic turmoil could trigger a black swan event, leading to a Bitcoin sell-off as investors liquidate their most liquid assets. Nevertheless, once the dust settles, the realization that Bitcoin is the world's most scarce monetary asset would likely reignite the bull market.

The 4-hour chart for Bitcoin's price shows a potential rejection at the $99,000 resistance level, which also aligns with the 0.5 Fibonacci level. The Stochastic RSI on this time frame, as well as the 8- and 12-hour time frames, indicates an overbought condition. Despite this, open interest has increased by over $2 billion in the last 24 hours, with leveraged long positions aiming to capitalize on the current rally. However, this strategy may be high-risk as the move starts to lose momentum.

The weekly chart for Bitcoin highlights the significance of the current resistance level. Only two full candle bodies have managed to close above this level so far, demonstrating its strength. While the short-term Stochastic RSI indicators are approaching overbought conditions, the weekly Stochastic RSI is almost completely oversold. This indicator typically peaks only twice a year, suggesting that the next peak could be crucial in driving Bitcoin to new heights in its bull cycle.