Bitcoin’s price action continued to drop on Monday, December 30, changing hands near $91,000, down 15% from its high this year. Despite the highly bullish announcements from major institutional players like MicroStrategy and Tether, the cryptocurrency’s technical indicators are calling for further downside, a potential 20% decline in its price.
Recent acquisitions by large players testify to continued confidence in its long-term value. MicroStrategy added 2,138 Bitcoins last week to take its total holdings to 446,400 BTC- a purchase for an eighth week.
Similarly, Tether has added 7,630 Bitcoin to its reserves, bringing total reserves past $7.7 billion in that digital currency. Firms like Marathon Digital, Riot Platforms, and Hut 8 Mining have extended their Bitcoin reserves.
Broader Market Weakness Fuels Bitcoin’s Ongoing Decline
These bullish moves have done very little to help improve Bitcoin’s retreat. According to analysts, the decline is principally driven by investors who gained from Bitcoin’s over 200% rally this year through profit-taking activity.
This is not an isolated bearish trend in Bitcoin but a reflection of the broader risk-off sentiment in financial markets. The US dollar index jumped to 108.14, while equities were also under significant pressure: the Dow Jones Industrial Average dropped by 670 points, and the Nasdaq 100 lost 320 points.
Rising bond yields further compounded market concerns. The 30-year yield reached 4.76%, while the 5-year yield gained 4.3%, near their highest levels. According to market watchers, this is because of the fear of higher budget deficits and bond vigilantes pushing yields upwards due to uncertainty over Donald Trump’s impending presidency. These have built fears of downside risks for crypto and stock markets going into 2025.
On the technical side, Bitcoin’s chart is flashing some disturbing signals. The cryptocurrency has fallen below its 50-day Exponential Moving Average and is finding resistance there. Moreover, Bitcoin appears to have traced an inverted head-and-shoulders pattern a reversal indicator with bearish tendencies.
Meanwhile, the key support of $91,430 held three times today will yield completely. Bitcoin also slumped a little below the Murrey Math Lines stop-and-reverse level of $93.750 to inflame bearish momentum further.
If those support levels were to break, analysts’ next key support level for Bitcoin would be $73,780, a peak from March 14, representing a 20% decline from current prices.
While this institutional support underpins the long-term potential, market conditions remain fragile at their core in the short run. Surging bond yields, broader market weakness, and bearish technical patterns suggest that Bitcoin’s recent decline could continue in weeks to come. Investors are advised to remain watchful of key support levels as the cryptocurrency markets are ready for potential volatility.
