Is Bitcoin's Current Downturn a Strategic Entry Point Before the Next Bull Cycle?

Bitcoin's recent price action has sparked intense debate among investors: Is this a temporary correction or the beginning of a deeper bear market? With the price slipping below critical moving averages and institutional demand zones, the question of whether this downturn represents a strategic entry point hinges on a nuanced analysis of technical support levels, macroeconomic drivers, and historical precedents. Let's dissect the data.

Technical Analysis: A Breakdown and Potential Reversal

Bitcoin's price has fallen below both the 100-day and 200-day moving averages, confirming a short-term breakdown from its equilibrium range. The $100K–$102K zone, historically a strong institutional demand block, now serves as a critical support area. On the 4-hour chart, the breakdown occurred after BTC rejected the upper trendline near $116K and collapsed beneath a rising wedge support, triggering a liquidation cascade, according to a Cryptopotato analysis.

Key support levels to monitor include $109,706, $108,785, and $108,039, while resistance sits at $111,373 and above, according to a Coincodyx prediction. The Relative Strength Index (RSI 14) at 47.79 and MACD (12, 26) at 54.66 suggest neutrality, indicating no overbought or oversold conditions but a consolidation phase. However, the market remains bearish, with 76% of indicators favoring a negative outlook and the Fear & Greed Index at 42 (fear territory), per the Coincodyx prediction.

A critical technical signal to watch is whether BTC establishes a higher low on the 4-hour chart. If it stabilizes above $100K and forms a bullish reversal pattern, this could signal exhaustion of the correction and institutional accumulation amid retail panic, per the Cryptopotato analysis.

Macroeconomic Drivers: Fed Policy and Dollar Dynamics

The Federal Reserve's cautious stance on rate hikes in 2025 has created a mixed environment for Bitcoin. Cleveland Fed President Beth Hammack recently stated that raising rates is "not my base case" due to economic risks, while the Fed has opted to ease borrowing costs to support a softening labor market, according to a TradingView report. This dovish pivot has historically buoyed risk assets, including Bitcoin, as lower rates reduce the cost of leveraged positions and speculative bets.

Interestingly, Bitcoin's correlation with inflation has weakened in 2025, with NYDIG reporting that a weakening U.S. dollar-not inflation-now drives BTC's price more consistently, according to a Coinrise article. This aligns with Bitcoin's evolving role as a global reserve asset, mirroring gold's inverse relationship with the dollar. Meanwhile, the Fed's shift from quantitative tightening to easing has amplified Bitcoin's volatility, with a 0.8 correlation to inflation data in Q3 2025, according to a Gate article.

The approval of spot Bitcoin ETFs has further decoupled BTC from dollar fluctuations, stabilizing volatility and attracting institutional capital, according to a Coinotag analysis. If the Fed delivers a December rate cut, liquidity injections could catalyze a V-shaped rebound, particularly if ETF inflows accelerate.

Historical Context: Correction Depths and Bull Cycle Patterns

Bitcoin's 2025 bull cycle has already seen a 20% correction from its October peak of $126K to November's $100K low. Historically, bull cycles exhibit recurring nine-month patterns, with the current phase at a critical juncture, according to a Coinotag analysis. Analysts like Alex Mason and Tom Lee argue that this correction mirrors past cycles, where dips below $100K were followed by explosive rallies to $200K–$250K, driven by Fed easing and ETF adoption, per the Coinotag analysis.

If the $100K–$102K support holds, the next target is a retest of $110K–$120K. A successful breakout could reinforce bullish momentum, while a breakdown below $100K might push prices toward $80K, according to an EBC forecast. However, the presence of institutional demand in the $100K zone and ETF-driven stabilization suggests this correction is more likely a consolidation phase than a bear market.

Strategic Entry Point? The Case for Caution and Opportunity

Bitcoin's current downturn presents a high-risk, high-reward scenario. Technically, the $100K–$102K zone is a critical inflection point. If institutional buyers absorb the dip and the Fed delivers rate cuts, this could mark a strategic entry point ahead of a potential $250K+ rally. However, sustained weakness below $100K would test deeper supports at $95K–$80K, requiring a more defensive approach.

Macro-wise, the interplay between dollar weakness, Fed policy, and ETF inflows creates a favorable backdrop for Bitcoin's long-term trajectory. While short-term volatility is inevitable, the alignment of technical and macroeconomic factors suggests this correction is part of a larger bull cycle narrative.

For investors, the key is to balance risk management with conviction. Diversified position sizing, stop-loss strategies near $95K, and a focus on ETF-driven liquidity could position portfolios to capitalize on the next leg higher.