Bitcoin’s ‘Shooting Star’ Signal at Record Peaks Raises Warning Flags: Godbole

Bitcoin (BTC) kicked off the new year on a strong note, briefly surpassing the six-figure mark in early 2024. While many analysts remain optimistic about BTC’s trajectory in 2025, with predictions suggesting prices could reach $185,000 or higher, recent price action hints at potential turbulence ahead.

In December, Bitcoin hit an all-time high above $108,000 but closed the month below $94,000, marking its first monthly decline since August. This downward move formed a bearish candlestick pattern known as the “shooting star” on the monthly chart, raising concerns about a potential reversal.

The shooting star pattern is characterized by a long upper wick, a small real body, and minimal or no lower wick. It signals that while buyers initially pushed prices significantly higher, sellers eventually regained control, driving the price back down near the opening level. In Bitcoin’s case, the upper wick was nearly four times larger than the candle’s body, underscoring strong selling pressure near the highs.

According to the CMT Association’s Level III textbook, the shooting star reflects a shift in market sentiment, with sellers asserting dominance after a sustained uptrend. For Bitcoin, the key level to watch is December’s low of $91,186. A drop below this support could confirm a bearish reversal.

Historically, similar shooting star patterns with long upper wicks have appeared near major bull market peaks, further emphasizing caution.

Broader Market Challenges

The bearish implications of the shooting star pattern align with broader macroeconomic headwinds. Hawkish signals from the U.S. Federal Reserve, rising Treasury yields, and a strengthening U.S. dollar index (DXY) have added pressure on risk assets, including Bitcoin.

Despite these challenges, analysts believe the Federal Reserve may reverse its hawkish stance in early 2025, potentially paving the way for renewed optimism in financial markets. “My outlook for 2025 remains bullish. Nothing has fundamentally changed since early November. February could emerge as a standout month, even though short-term headwinds persist,” said trader and analyst Alex Kruger on X.

Kruger anticipates a dovish shift from the Fed in the first quarter of 2025, which could reignite bullish sentiment across markets. Until then, Bitcoin traders and investors will closely monitor key technical levels and macroeconomic developments to gauge the cryptocurrency’s next move.