On Tuesday, January 14, Bitcoin traded above $96,000. This followed last week’s flash crash, where it briefly fell below $90,000. Market experts, however, predict a drop to $70,000. Traders are likely to react to macro signals and technical factors. This article explores the forces driving Bitcoin’s movement.
Cryptocurrencies face a tense period ahead of President-elect Donald Trump’s inauguration on January 20. Trump’s pro-crypto stance bodes well for the market. Key positions like SEC Chair and AI & Crypto Czar will be crucial. Yet, uncertainty remains about his administration’s monetary policy and Bitcoin’s acceptance.
The correlation between Bitcoin’s performance and US macroeconomic indicators has become more sensitive. Since Bitcoin is perhaps the most liquid of all risk assets, it responds rapidly to overall economic updates. On Tuesday, Bitcoin started trading seasonally higher at $94,161 and touched an intraday high of $97,371.
Bitcoin Act Proposal: Strategic Reserve Sparks Caution
One big attraction is Republican senator Cynthia Lummis’s putative reform for a new Bitcoin Act to create a Strategic Bitcoin Reserve. When implemented, the U.S. government will use dollar-denominated debt to buy 1,000,000 BTC within five years, approximately 5% of Bitcoin’s circulating supply. Although this proposal shows how Bitcoin is becoming more institutionalized, traders’ risk management minds are still wary of the nascent scheme.
This may well be so because institutional investors seem to be associating themselves with pictures of retreats. According to AmberData, volumes are down, which suggests a risk-off approach to Spot Bitcoin ETFs located in the United States. Continuous redemptions from major participants such as 21Shares and Franklin Templeton cement this skepticism.
Bitcoin is again on its target of $100,000. The first level is presented as the key zone of value of the main digital currency, while analysts claim that a stabilization above $95,000 can reawaken institutional interest. On the other hand, a failure to maintain these pegs could deepen sales. Traders watch ETF basket positioning as a sign of a warning.
Fear And Greed Index Signals Bitcoin Correction
The Fear and Greed Index also shows the deterioration of(dat) sentiment based on Bitcoin’s drop to $90,000. Swiss block insights reveal higher precautions among traders regarding a near-term correction.
A source from Coinglass points to increased action in Bitcoin’s derivatives. Both open interest and options trading volumes have risen dramatically over the last 24 hours on the heels of a Trump win. However, this may position traders on the wrong note, especially when prices turn down, resulting in long liquidation.
The Market Value to Realized Value (MVRV) ratio, a popular on-chain analysis, has now hit 2.7x, an occasion that usually leads to sell-offs by major investors. Crypto strategists suggest it is dangerous for the MVRV ratio to rise to 4x or 6x as it leads towards a huge crash.
Along with aggressive expectations for Federal Reserve rate hikes, these signals indicate the BTC/USD pair may retest the $76,000-level support level and even fall below $70. Indeed, Santiment’s Network Realized Profit/Loss supports such an opinion, with long-lasting profit-taking protruding, which usually indicates an oncoming price reset.
Unfortunately, market experts’ opinions on Bitcoin’s near future differ. According to Keith Alan, a co-founder of Material Indicators, $86 000 is the critical resistance level, while $76 000 is our second resistance level. Failure to hold these levels could see Bitcoin revisit an all-time high of $69K in January this year.
At the same time, Sergei Gorev, Head of Risk at YouHodler, underlined the significance of the $96,800 level. Thus, Bitcoin has indeed recovered from recent lows; however, its capability to stay above such lows will be important in ascertaining its future trend.
Bitcoin is hovering around $96,600. Two key support zones might hold it up: one between $81,500 and $85,072 and another between $76,900 and $80,216. If it breaks through these zones, it could drop to $70,000, reversing all gains by November 2024.
Trend indicators like the MACD and RSI show mixed signals. The MACD is negative, leaving traders uncertain. The RSI was near 50 but has now risen to 51.
The coming weeks are crucial. Bitcoin is facing profit-taking, reduced institutional investment, and macroeconomic challenges. Developments from Trump’s administration on regulation will be closely watched. These factors could determine whether Bitcoin stays above $96,600 or below $70,000.
Been waiting for a deeper correction, and it may be developing now, however I do expect another Trump Pump at some point relative to Inauguration Day. Of course, must watch to see if it becomes rocket fuel for a rally or a sell the news event.
Regardless of when or whether or… pic.twitter.com/AIQA6uOMPG
— Keith Alan (@KAProductions) January 13, 2025
