The pressing question on the minds of crypto traders is: Has bitcoin’s (BTC) price weakness run its course, or is there more to come?

The former appears to be the case in Monday’s price action, characterized by a quick recovery from low intraday levels in contrast to mid-December, when the rally stalled and fell from record highs above $108,000.

On Monday, BTC initially fell as investment banks downgraded Fed rate cut expectations, with some discussing the potential for rate hikes following Friday’s stellar jobs report, causing prices to dip below the lower end of the key $90,000-$93,000 support zone as significant. US stock indexes gapped lower.

However, the breakdown of support was short-lived and by the end of the day, BTC had risen back to $94,000, leaving behind a classic “long-legged Doji candle”.

The long wick signifies downtrend exhaustion, indicating that while sellers initially drove prices lower, buyers ultimately overpowered them. This pattern is often seen as a potential signal of a bottom, mainly when it occurs at key support levels or after a notable price drop, as is the case for BTC.

The long-legged doji has appeared at the support zone (horizontal lines) that has consistently limited the downside since late November.

An inverse of the above is what we saw on December 16, when the bulls failed to hold prices at record highs above $108,000, printing a doji candle with a longer upper shadow. It was a sign that the uptrend was running out of steam, with sellers looking to assert themselves.

So what?

While Monday’s price action suggests a potential bottom, confirmation is required in the form of a decisive move above the day’s high of $95,900.

Chart-driven directional traders typically wait for that before entering the market with new buy orders. Meanwhile, Monday’s low near $89,000 is now the level to beat for the bears.

Note that BTC’s supply-demand dynamics continue to lean heavily. As Bitwise’s Head of Research – Europe Andre Dragosch pointed out at X, corporate demand for BTC has already outstripped the supply of new coins this year.

Price volatility may rise again on the back of Wednesday’s US CPI report, which could affect Fed rate cut expectations.

“After Monday’s sharp decline, Bitcoin rebounded from a low of $89,000 as traders await the January 15 US CPI report. Major altcoins followed suit, with many losing more over the past 24 hours,” Neal Wen, Head of global business development at Kronos Research, told CoinDesk.

“Market watchers are now focused on signs of stability to see further downside or upside,” Wen added.