Bitcoin (BTC) has dipped to $86,500 amid a confirmed Wave 4 correction in its Elliott Wave cycle, marking a significant retracement following its recent rally above $108,000. Despite strong institutional buying from Strategy—formerly known as MicroStrategy—the cryptocurrency is undergoing technical consolidation, with traders closely watching key Fibonacci support levels for signs of a potential rebound.
Elliott Wave 4 Confirmed After Sharp Correction
Technical analysis confirms that Bitcoin has entered a Wave 4 correction after completing a powerful Wave 3 impulse. The breakdown below critical support at $92,000 invalidated bullish continuation patterns and triggered a deeper pullback into Fibonacci retracement territory.
On the daily chart, BTC has breached the 0.236 Fibonacci level and is now testing the more significant 0.382 retracement at $85,848. This zone is widely watched by traders as a potential reversal point, historically offering strong support during corrective phases.
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The current correction follows an A-B-C structure typical of Wave 4 patterns:
- Wave A: Initial sharp decline from the peak.
- Wave B: Temporary relief bounce that failed to reclaim prior highs.
- Wave C: Accelerated downward leg now approaching completion.
If this pattern holds, a reversal could emerge near $85,848, paving the way for Wave 5—an anticipated final leg of the bull cycle targeting new all-time highs.
Oversold RSI Hints at Short-Term Relief
While the price action remains bearish, momentum indicators suggest exhaustion among sellers. The daily Relative Strength Index (RSI) has entered oversold territory, a signal that often precedes short-term rebounds.
An oversold RSI doesn’t guarantee an immediate turnaround but increases the probability of a corrective bounce—especially if supported by volume and bullish candlestick patterns. Traders are now watching for confirmation signals such as:
- Bullish divergence on the RSI
- Reclaiming key moving averages
- A decisive close above $93,676
Until such confirmation appears, the path of least resistance remains downward. However, sustained trading above $85,848 could set the stage for a recovery toward $90,000–$93,676 in the near term.
Strategy’s $2 Billion Bitcoin Buy Sparks Confidence
In a bold move reinforcing long-term confidence in Bitcoin, Strategy acquired an additional **20,356 BTC for $1.99 billion**, averaging $97,514 per coin. This purchase was funded through a recent $2 billion senior convertible note offering, part of the company’s ambitious “21/21 Plan” to raise $42 billion over three years exclusively for Bitcoin investments.
With this acquisition:
- Strategy’s total Bitcoin holdings approach 500,000 BTC
- Average purchase price: $66,357 per BTC
- Aggregate investment: $33.1 billion
- Unrealized profit exceeds $14.8 billion
Despite reporting a $670 million net loss in Q4 2024 due to non-cash impairments, the company’s core strategy remains unchanged—accumulate Bitcoin aggressively and hold for long-term appreciation.
Institutional trust in Strategy continues to grow:
- BlackRock increased its stake to 5%
- Twelve U.S. states now hold shares in pension funds or state treasuries
This level of institutional backing underscores growing acceptance of Bitcoin as a strategic reserve asset.
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Technical Outlook: Will BTC Rebound or Extend Losses?
Short-term charts reveal a complex corrective structure forming on the 1-hour timeframe—a WXYXZ pattern—suggesting BTC may be in the final phase of its downward move.
Key observations:
- BTC broke below a descending channel, accelerating the sell-off.
- Price is now approaching the $85,848 (0.382 Fib) level—a high-probability reversal zone.
- RSI on the 1-hour chart is deeply oversold, indicating short-term exhaustion.
A successful bounce from this zone could trigger a corrective rally toward:
- $90,000 – psychological support
- $93,676 – 0.236 Fibonacci retracement and immediate resistance
- A close above $95,207 would confirm bullish reversal potential and signal the start of Wave 5
Conversely, failure to hold $85,848 opens the door to further downside:
- Next target: $79,522 (0.5 Fib)
- Critical support: $73,196 (0.618 Fib)
A drop below $73,196 would challenge the integrity of the broader uptrend and may delay the next bullish phase.
Key Levels to Watch
Resistance Levels
- Immediate: $93,676
- Key: $95,207
- Major: $102,245
Support Levels
- Immediate: $85,848
- Key: $79,522
- Critical: $73,196
FAQ: Understanding Bitcoin’s Current Correction
Q: What is a Wave 4 correction in Elliott Wave Theory?
A: Wave 4 is a corrective phase that follows an impulsive Wave 3. It typically involves sideways or downward movement and allows the market to consolidate before launching into Wave 5—the final upward push in a bull cycle.
Q: Why did Bitcoin drop despite massive institutional buying?
A: While large purchases from firms like Strategy provide long-term support, short-term price action is influenced by broader market sentiment, macroeconomic factors, and technical positioning. Institutional buying may not prevent corrections but often strengthens long-term fundamentals.
Q: Is Bitcoin still in a bull market?
A: Yes. The current drop is viewed as a healthy correction within an ongoing bull trend. As long as BTC holds above critical support levels like $73,196 and eventually breaks past $108,000, the primary uptrend remains intact.
Q: What does an oversold RSI mean for BTC?
A: An oversold RSI suggests that selling pressure may be exhausted, increasing the likelihood of a short-term rebound. However, it's not a standalone buy signal—confirmation through price action is essential.
Q: When could Wave 5 begin?
A: Wave 5 is expected to begin after Wave 4 completes near key Fibonacci levels ($85,848–$79,522). Confirmation includes reclaiming $93,676–$95,207 with strong volume and bullish momentum.
Final Thoughts: Patience During Correction
Bitcoin’s dip to $86,500 reflects typical market dynamics during a mature bull cycle—sharp rallies followed by deep corrections. While short-term volatility may unsettle some investors, the broader picture remains constructive.
Strategy’s continued accumulation adds credibility to Bitcoin’s long-term value proposition. Meanwhile, technical indicators suggest the market is nearing a decision point—either a bottom formation or further downside before recovery.
Traders should monitor key support and resistance levels closely while preparing for increased volatility ahead of the next directional breakout.
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Core Keywords: Bitcoin price analysis, Elliott Wave Theory, BTC correction, Fibonacci retracement, RSI oversold, Wave 4 correction, institutional Bitcoin investment