Bitcoin has dropped to levels not seen since November, with its price slipping below $90,000 for the first time in two months as the US dollar’s strength exerts pressure on the cryptocurrency market. The move resulted in a nearly 5% daily loss and saw the liquidation of over half a billion dollars in long crypto positions.
The broader market felt the impact, with the S&P 500 and Nasdaq Composite Index both opening lower amid concerns over the strengthening US dollar ahead of President-elect Donald Trump’s inauguration. Analysts are adjusting their projections, with some suggesting Bitcoin could fall as low as $69,000, a figure reminiscent of its 2021 all-time high.
Keith Alan, a co-founder of trading resource Material Indicators, points to strong technical support around the $86,000 level, which aligns with the 100-day simple moving average. He noted that additional support levels could be found at $76,000 and $69,000, the latter being a previous resistance/support flip.
Veteran trader Peter Brandt highlighted a concerning head and shoulders pattern in Bitcoin’s chart, suggesting the possibility of further declines. On a more optimistic note, some market commentators have identified similarities between current price movements and previous market cycles, pointing to potential resilience in Bitcoin’s fundamentals.
QCP Capital, a trading firm, is closely watching upcoming US economic data, which could introduce further volatility. Inflation concerns have intensified following a strong nonfarm payroll report, complicating the Federal Reserve’s fiscal strategies and triggering fears of continued high interest rates.
The ongoing macroeconomic uncertainties pose a challenge to Bitcoin’s status as an inflation hedge, a role it may be tested to fulfill if surprises emerge from upcoming economic data. As the situation develops, market participants and analysts alike remain vigilant, monitoring price levels and macro signals that could dictate Bitcoin’s next moves.
