The price of Bitcoin (BTC) has dropped 4.75% in a day after establishing its record high of around $108,365, and was trading for approximately $104,175 on December 18th. This decline appears to be ahead of the United States Federal Reserve’s key interest rate decision, suggesting that most Bitcoin traders are de-risking before the event.

BTC/USD Four-Hour Price Chart

[Image description: BTC/USD four-hour price chart from TradingView]

The Fed is likely to vote for another quarter-point rate cut on December 18th, especially in the wake of last week’s consumer price index (CPI) data release. The CPI showed inflation rising in November, and Bitcoin’s price surged by up to 13.20% since the CPI data release on December 11th.

However, this correction now reflects a "sell-the-news" sentiment in the market. As Crypto Rover notes:

Sell-the-News Sentiment

[Source: Crypto Rover]

The unclear Fed rate path ahead is further contributing to Bitcoin’s decline. K33 Research analysts Vetle Lunde and David Zimmerman note that the central bank may pause rate cuts in the coming months.

"We expect this week’s FOMC to contribute to the market’s volatility," K33 Research analysts Vetle Lunde and David Zimmerman wrote in a note, adding:

"Following the FOMC, quiet macro weeks await, potentially setting the stage for Bitcoin momentum to further materialize during the holiday season."

Bitcoin Onchain Indicator Shows Cautious Profit-Taking

The Stock-to-Flow (S2F) Reversion indicator is signaling cautious profit-taking as Bitcoin’s price trades near a new record high. Historically, when the S2F reversion ratio rises above 2.5, it has often marked levels where the market shows signs of potential short-term corrections.

[Image description: Stock-to-flow reversion chart from CryptoQuant]

Conversely, when the S2F reversion ratio drops below 1, it indicates a buy signal. For instance, on September 11th, the metric fell below 1, which followed a sharp Bitcoin price rebound.

Between December 16th and 17th, the ratio dropped from 2.47 to around 2.27. As CryptoQuant analyst DarkFrost notes:

"A prudent strategy when using this indicator is to take moderate profits once the S2F reversion ratio hits 2.5 and to secure larger profits when the ratio exceeds 3."

Bitcoin Correction to $92,000?

Bitcoin’s price drop in the last 24 hours appears further due to weakening technicals. First, the drop follows a growing bearish divergence between BTC’s rising prices and declining Relative Strength Index (RSI) on the daily chart.

[Image description: BTC/USD daily price chart from TradingView]

Simply put, Bitcoin’s upward momentum is weakening, which typically precedes a price correction such as the one happening today. Second, Bitcoin’s drop is part of its prevailing rising wedge trend, where the price is rising inside two converging, ascending trendlines.

On December 18th, BTC tested the wedge’s upper trendline as resistance, leading to a sharp decline toward its lower trendline support today.

Related: Bitcoin May Hit $200K by Mid-2025 as Price Drops "Will Remain Mild," Says Bitfinex

Traditional analysts see rising wedges as bearish reversal indicators, resolving when the price breaks below the lower trendline and drops by as much as the wedge’s maximum height. This puts Bitcoin’s downside target for December at approximately around $92,000, coinciding with the 50-day exponential moving average (50-day EMA; the red wave).

Conclusion

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

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