Why Bitcoin Price Is Dropping Suddenly After Recovery to $102K?

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As a dedicated crypto investor, I’ve witnessed yet another dip in Bitcoin‘s price, diving below $97.5K after reaching an intraday high of $102,712. Yet, the optimistic atmosphere at the dawn of 2025 persists, driven by the anticipated bullish market shift under the crypto-friendly administration led by Donald Trump, set to take office on January 20. However, the market remains cautious in light of potential liquidity issues and volatility risks stemming from the release of jobs data and FOMC minutes.

Bitcoin Loses Earlier Gains After Jobs Data

In November 2024, as reported by the U.S. Bureau of Labor Statistics, the number of available jobs under the JOLTS program jumped by 259,000 to reach a staggering 8,098 million. This suggests that the labor market continues to thrive, potentially limiting the scope of Federal Reserve interest rate reductions in 2025. Notably, this marks the second consecutive month of job openings growth. The sectors experiencing an increase in job openings include professional and business services, finance and insurance, as well as private educational services.

Currently, the ISM Services Prices PMI indicates a robust U.S. economy. However, before Trump’s inauguration, there were worries about market instability due to the resilience of the U.S. economy. On Tuesday, U.S. stocks dropped, ending a two-day rise, as new economic data sparked discussions that the Federal Reserve might maintain interest rates this month, despite growing inflation.

As a crypto investor, I noticed a significant surge in the US dollar index (DXY), bouncing back above 108.50 following a brief two-day dip that, surprisingly, led to a Bitcoin price recovery. Additionally, the 10-year Treasury yield spiked to a 35-week high, reaching 4.68%.

BTC Price Falls 5% Within An Hour

In the past day, Bitcoin’s price dropped by around 5%, now sitting at approximately $97,566. Earlier today, it reached a low of $97,153 and a high of $102,712. Interestingly, despite this drop, there has been an uptick in trading volume, up by about 27% over the past 24 hours, suggesting a potential decrease in trader enthusiasm.

In the last seven days, the value of Bitcoin has surged by more than 10%, potentially reaching a new all-time high due to optimistic economic and technological indicators. This upward trend seems to be fueled by investments in Bitcoin Exchange Traded Funds (ETFs), suggesting that institutional demand is growing once again.

As an analyst, I’ve noticed an intriguing trend: Bitcoin and cryptocurrency prices have surged following the strongest two-day influx into ETFs since mid-November. Additionally, Bitcoin’s open interests have been steadily climbing, marking a robust seven-day stretch of daily positive returns.

The cost of Bitcoin has soared again, reaching around $100,000, which suggests that the Coinbase Trading Spread (an indicator similar to the Premium Index) has turned positive once more.

Bitcoin Price Hits Over $102K On Donald Trump’s Inauguration

Bitcoin’s recent dip appears to be a typical slowdown that occurs around the Christmas season. However, as reported by Matrixport, this trend seems to be shifting, potentially leading to a surge of positive momentum in the worldwide crypto markets.

Furthermore, investors anticipate the positive trend to persist as Donald Trump takes office on January 20. His pro-cryptocurrency administration aims to bring regulatory clarity in the country, potentially setting a model for other nations to follow. The strategic Bitcoin reserves proposed by Trump have gained widespread acceptance from various countries and states.

Currently, Arthur Hayes, a co-founder of BitMEX, has forecasted a significant drop in Bitcoin and the crypto market around mid-March. This prediction is primarily due to decreasing liquidity within the US dollar. Despite the Reverse Repo Facility (RRP) and the US Treasury’s General Account (TGA) maintaining an optimistic outlook, this momentum might not persist past March.

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2025-01-07 19:24