Bitcoin’s price has experienced a recent dip to $92,500, with analysts attributing the decrease to increasing concerns over the Federal Reserve’s monetary policy and rising bond rates. The cryptocurrency had temporarily surpassed the $100,000 mark on January 7, signaling cautious optimism before this downward correction.
According to Ryan Lee, chief analyst at Bitget Research, robust U.S. economic data points to likely interest rate hikes, making cryptocurrencies less appealing as investments while the Federal Reserve’s hints at tighter monetary measures exacerbate market corrections. Current expectations indicate that the first rate cut could occur on June 18, as per CME Group’s FedWatch tool, though the imminent Fed meeting on January 29 is anticipated to leave rates unchanged.
The market correction has resulted in the liquidation of over $631 million in leveraged long positions in a 24-hour span, as reported by CoinGlass. Lee remarked that this liquidation might usher in a consolidation phase, compelling traders to reduce leveraged positions and reevaluate strategies based on the interplay of macroeconomic indicators and crypto market dynamics.
Market analysts predict that Bitcoin prices might further test the $90,000 support level before potentially rallying beyond $126,000. John Glover, Ledn’s chief investment officer, suggests that Bitcoin is nearing the end of a consolidation phase, anticipating a strong upward move in the market following this period of adjustment. Despite the current volatility, analysts remain optimistic about Bitcoin’s long-term trajectory, with some projecting a significant cycle top exceeding $150,000 by late 2025, bolstered by an anticipated $20-trillion expansion in global money supply.
