Bitcoin’s ‘Shooting Star’ Pattern Signals Potential Reversal Amid Hawkish Fed Stance
Bitcoin (BTC) kicked off the new year on a strong note, briefly crossing into six-figure territory in early 2024. Many analysts remain optimistic about 2025, with forecasts suggesting BTC could surge to $185,000 or beyond.
However, the journey upward may not be as smooth as expected. Recent price patterns hint at growing seller dominance, raising the possibility of a significant pullback.
In December, Bitcoin reached an all-time high above $108,000 but ultimately closed the month below $94,000, marking its first monthly loss since August. This price movement resulted in a bearish reversal candlestick pattern known as a “shooting star” on Bitcoin’s monthly chart.
A shooting star is characterized by a long upper wick — representing a significant difference between the high and the open — and a small body, indicating minimal difference between the open and close. Ideally, the wick should be at least twice the size of the body, with a negligible lower wick. In Bitcoin’s case, the upper wick was nearly four times the size of the body, underscoring the sellers’ dominance at higher price levels.
This candlestick formation suggests that while buyers initially drove prices higher, sellers ultimately regained control, pushing BTC back below its opening price. According to the CMT Association’s Level III textbook, such patterns indicate that bears are potentially taking control.
This bearish signal comes after a significant rally from $70,000 to over $100,000. A confirmed bearish reversal would require BTC to drop below December’s low of $91,186 — a crucial support level for bulls to defend.
Historically, similar candlestick patterns with pronounced upper wicks have often preceded market tops in past bull cycles.
Macro Challenges and Short-Term Headwinds
The cautious signal from Bitcoin’s shooting star aligns with ongoing macroeconomic headwinds. Hawkish comments from the U.S. Federal Reserve, rising Treasury yields, and a strengthening U.S. dollar index (DXY) have added pressure on risk assets.
Despite these challenges, market participants remain confident that the Fed will eventually pivot back to a more dovish stance in 2025, paving the way for renewed bullish momentum in Bitcoin and other risk assets.
“My outlook for 2025 is straightforward: higher. Nothing has fundamentally changed since Nov. 5. February will likely be the strongest month, though the Fed’s current hawkish stance may create short-term hurdles,” said trader and analyst Alex Krüger on X.
Krüger further noted that he expects the Fed to pivot dovish by Q1, with markets pricing in more rate cuts, potentially reigniting Bitcoin’s upward trajectory.
While short-term volatility and macroeconomic uncertainty may create challenges, the broader outlook for Bitcoin remains optimistic, provided key support levels hold.
