Bitcoin Price News: BTC Sticks to the Script and Could Drop to $77K After Retest

Bitcoin (BTC) bounced back during the weekend after briefly dropping near the $80,000 level as macroeconomic projections experienced a big positive change.

Last week, a delayed jobs report for September surpassed analysts’ projections as non-farm payrolls increased by 119,000 during the month, compared to an estimate of 50,000 new jobs for this period.

In addition, dovish comments from the head of the New York Federal Reserve indicating that an interest rate cut was still possible during the December FOMC meeting were enough for analysts to revisit their forecasts.

FedWatch’s Rate Cut Probabilities for December FOMC Meeting – Source: CME Group

At the time of writing, data from FedWatch shows that the odds of a rate cut in December have increased once again from 44% last week to 80% at the time of writing.

These macroeconomic variables were likely the reason why BTC has bounced in the past few days. However, the top crypto is not out of the woods yet, as a close analysis of the price action shows that this could be a mere retest of a former area of support that could now turn into resistance.

Recovery or Retest? BTC Risks Drop to $77K If This Happens

In a previous Bitcoin price prediction, we mentioned that the $88,000 level was critical for BTC as a drop below this mark could set the token on course to hit $77K in the next few days.

BTC/USD Daily Chart (Bitstamp) – Source: TradingView

This bearish breakout occurred, and the price action has followed the trajectory we set forth for the top crypto, as it now seems headed to retest this area from below.

When this happens, the market is trying to determine if there is enough buying interest at that level to push the price higher. Meanwhile, if selling pressure increases at that point again, this retest should lead to the continuation of BTC’s downtrend toward the $77,000 area.

The Relative Strength Index (RSI) shows that negative momentum has accelerated to the point of pushing this oscillator to as little as 25 at some point. Reversing that kind of pessimism is not that easy.

Hence, unless BTC breaks above $90,000 and invalidates this bearish setup, this recent bounce is just a retest of this key area.

Contrarian Signals Favor Bullish Outlook

Despite this bearish outlook, some contrarian signals have emerged that are still worth considering. For example, pessimism has reached extreme levels. In this regard, the Fear and Greed Index plummeted to 11 at some point last week.

This is the lowest level that this market gauge has reached since its inception in June 2023. Back in April this year, when the F&G hit similar levels, the market actually reached its local bottom. After that, Bitcoin went on to surge until hitting a new all-time high just a few weeks later.

Open Interest (OI) in Bitcoin Futures – Source: CoinGlass

In addition, open interest (OI) has declined to the same levels we saw back then. When traders capitulate this much, and investors get spooked, the smart money tends to come in to buy low to then sell high months later.

Is this latest downtrend a buy signal? A break above $80,000 could confirm this. Paired with these contrarian readings and a change in rate cut probabilities, if BTC starts to recover and positive momentum accelerates, the market might be ready to push the top crypto back to its recent highs.