Bitcoin has experienced a significant decline this week, with the cryptocurrency dropping from its recent high above $100,000 to around $91,200. This sharp downturn has sent ripples through the entire crypto market, triggering substantial liquidations and traders uncertainty.
Let’s check why Bitcoin is going down and analyze if BTC price can rebound in the coming days and weeks.
Why Is Bitcoin Falling? BTC Price Declined Three Days In a Row
Bitcoin's price during the Friday session on January 10, 2025, halted at a local support zone, ending a three-day decline after briefly rebounding above the psychological $100,000 mark.
From a technical perspective, concerns arise as the price dropped below the 50-day exponential moving average. However, the current levels align with the local lows formed during the consolidation phase observed since mid-November.
Alongside Bitcoin, other major cryptocurrencies also experienced losses, with similar downward trends noted in XRP and Cardano.
At the time of writing, Bitcoin changes hands at $94,300, rebounding from the local lows.
Let’s examine the factors behind the recent decline in Bitcoin and other cryptocurrencies.
Market Impact and Economic Factors
The primary catalyst for this decline has been stronger-than-expected U.S. economic data, particularly in the services sector and labor market. This robust economic performance has diminished hopes for aggressive Federal Reserve rate cuts in 2025, leading to a spike in Treasury yields and a strengthening U.S. dollar.
The market reaction has been severe, with over $390 million in total crypto liquidations occurring in the last 24 hours, of which approximately $54 million was specifically in Bitcoin positions.
Government and Institutional Factors
Adding to the selling pressure is the U.S. government's planned liquidation of 69,370 Bitcoins seized from the Silk Road marketplace. This substantial amount, valued at approximately $6.5 billion, is scheduled for sale through the U.S. Marshals Service, creating additional market uncertainty. Furthermore, institutional sentiment has weakened, with significant ETF outflows and declining confidence among major investors.
Bitcoin Technical Analysis and Market Outlook
Looking at Bitcoin from a technical perspective, we see that the price is currently utilizing the lower boundary of the consolidation channel formed since mid-November. Although it has dropped below the previously mentioned 50-day EMA, this should not cause concern for bulls and buyers. As long as the sideways channel between the $91,000 support and the nearly $108,000 resistance remains intact, bears are likely to stay on the sidelines.
Moreover, in my opinion, even if the current formation highlighted in purple on the chart breaks, it could present an opportunity to acquire Bitcoin at more attractive, lower prices. The next technical support level is around $80,500, marked by the local highs from mid-November. Another support level lies just below $73,000, corresponding to the October peaks. In my view, only a drop below this level would signify that sellers are regaining control.
The ultimate support zone separating buyers' dominance from sellers' lies near $60,000, representing the lows from three months ago. I would consider any movement above these levels as a healthy correction within an extended upward trend.
Regarding resistance levels currently visible on Bitcoin’s chart, in addition to the upper boundary of the consolidation channel, key levels include just under $100,000, reflecting the peaks from the second half of November, and $102,700, representing the recent highs established at the beginning of this year.
Bitcoin price support and resistance zones
Bitcoin Price Prediction: Future Prospects
Despite the current downturn, many analysts maintain optimistic long-term projections for Bitcoin. Standard Chartered Bank forecasts a price target of $200,000 by the end of 2025, while other prominent analysts project values ranging from $150,000 to $250,000.
These bullish predictions are based on factors such as increased institutional adoption, the impact of Bitcoin ETFs, and the potential implementation of crypto-friendly policies under the incoming administration.
Here's a table summarizing recent Bitcoin price predictions from various analysts and institutions:
The market's immediate focus remains on whether Bitcoin can stabilize and regain momentum above the psychological $100,000 level. While short-term volatility persists, historical patterns suggest that such corrections often precede significant rallies, particularly in the context of Bitcoin's four-year cycle.
Bitcoin Price, FAQ
Will Bitcoin Crash?
While Bitcoin has experienced a significant decline recently, dropping to around $91,200, analysts see this as a healthy correction rather than a crash. Key support levels remain intact, with $91,000 and $80,500 providing potential floors. A drop below $73,000 or $60,000 could signal a more bearish trend, but this is not the current outlook.
Will Bitcoin Go Back Up?
Bitcoin has already rebounded slightly to $94,300 from its local low. Long-term forecasts remain optimistic, with analysts predicting prices ranging from $150,000 to $250,000 by 2025. Factors such as institutional adoption and the impact of Bitcoin ETFs are expected to drive future growth.
Why Bitcoin Is Down?
Bitcoin's recent decline is attributed to stronger-than-expected U.S. economic data, which reduced hopes for Federal Reserve rate cuts. This strengthened the U.S. dollar and increased Treasury yields, creating a challenging environment for cryptocurrencies. Additionally, the planned sale of seized Bitcoins by the U.S. government and weak institutional sentiment have added to the selling pressure.
How Much is Bitcoin Worth?
At the time of writing, Bitcoin is trading at approximately $94,300, rebounding from its recent low of $91,200. It remains below the psychological $100,000 mark but within a consolidation range between $91,000 and $108,000.
This article was written by Damian Chmiel at www.financemagnates.com.
