Bitcoin on the decline? Analysts believe Bitcoin's uptrend is not over!
The price of Bitcoin has fallen sharply over the past 24 hours, falling 3.6% to just over $94,000 (€89,000) at 5:30 am CET. The pullback appears to have been fueled by rising profits as the post-Trump rally stalled, removing a new catalyst for bitcoin investors to push the world's largest cryptocurrency past the key physical barrier of $100,000 (€95,400).
Bitcoin hit a new high of over $99,000 (€94,400) last Friday, a 46% increase since November 5 amid Trump's victory in the US election. Bitcoin rallied before and after the US election as markets expected the Trump administration to enact policies favorable to cryptocurrencies. The president-elect said he would make America a "crypto capital" in his campaign.
Despite the decline, analysts believe that Bitcoin's upward trend is not over.
Bitcoin has gained 122% year-to-date, supported by the approval of the Bitcoin ETF by the US Securities and Exchange Commission (SEC) in February and a Bitcoin halving event in April. Meanwhile, central bank rate cuts and liquidity easing provided a macro headwind for cryptocurrencies this year.
Cryptocurrency markets often see high volatility due to a lack of fundamental basis for valuations. The price movements of digital tokens depend purely on speculative trades on technical analysis on the charts. Meanwhile, increasing institutional adoption of Bitcoin assets becomes a major driver of market volatility.
Market trends are often shaped by sentimental trading behavior and liquidation volumes. Therefore, large trades by major holders, or "whales," can significantly affect prices, especially on smaller exchanges or during periods of lower trading activity.
According to CoinShares data, US-based Bitcoin exchange-traded funds (ETFs) saw a record weekly inflow of $3.38 billion (€3.22 billion) between November 18 and 22, more than double the week of passed. On Friday, the price of Bitcoin rose to a new record above $99,500 (€94,900), but faded rapidly near the $100,000 mark.
According to Coinglass data, a liquidation of more than $500 million (€477 million) was recorded in crypto-tracked futures after Bitcoin's price correction on Sunday. In the Asian session on Tuesday, Bitcoin experienced further heavy liquidation of more than $144 million (€137 million), suggesting more volatility ahead.
Technical analysis shows that Bitcoin charts came up with overbought signals, which could lead to further correction. Some analysts expect the hurdle to take it to $80,000 (€76,300) before consolidating for another potential uptrend. However, the markets will need new catalysts to go beyond the $100,000 mark.
Bitcoin has reached new highs every four years in the last two bull cycles since 2017. Each cycle experienced a more than tenfold increase before a return of between 70% and 80%. Bitcoin is up roughly 560% since its low two years ago, suggesting there may be more room for growth if history repeats itself.
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