Why Bitcoin Price Is Going Down Today?

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As a seasoned crypto investor who has weathered numerous market cycles and witnessed the rise and fall of digital currencies, I find myself cautiously optimistic ahead of today’s US Fed interest rate decision. The selling pressure on Bitcoin, pushing it under $104K, is a reminder that this volatile asset class demands constant vigilance.

Bitcoin’s price is experiencing significant selling pressure during the Asian trading hours, dipping below the $104K threshold prior to today’s U.S. Federal Reserve interest rate decision. The general market anticipation is that the Fed will implement a 25 basis point rate reduction, which could foster some optimism.

Significantly, traders are exercising caution before proceeding with additional actions. Cryptocurrency tycoon Arthur Hayes forecasted significant volatility in the Bitcoin and cryptocurrency market during Donald Trump’s inauguration on January 20.

Bitcoin Price Retraces Ahead Fed Rate Cut Decision

In the hours leading up to the Federal Reserve’s rate cut decision, Bitcoin’s price is experiencing some downward trend and dipping below $104,000. Mark Cabana, an executive at Bank of America, predicts that the Fed may announce a 25 basis point rate reduction due to worries about prolonging a tight monetary policy. Despite indications of labor market softening, inflation remains high with the Consumer Price Index jumping from 2.4% in September to 2.8% in November.

Despite the markets having factored in a 25 basis points rate reduction, there is growing interest in the remarks by the Federal Reserve Chair Powell regarding the 2025 monetary policy. With persistently high inflation, the US Federal Reserve could scale back its projected four rate cuts to only three for the year 2025. This indicates that the US central bank may adopt a more aggressive stance in tackling inflation to bring it down to its target of 2%. Kurt S Altrichter, founder of Ivory Hill Wealth, pointed out this potential shift in approach.

Tomorrow’s Federal Reserve meeting isn’t solely focused on the anticipated rate reduction; it also revolves around the Fed’s continued dedication to reducing rates in 2025. More reductions would be beneficial for both stocks and bonds, while fewer reductions would prompt the markets to reassess their expectations.

On-Chain Data Signals Sell-Off

In the midst of this ambiguity, some investors who typically keep their Bitcoin for a short period have decided to cash in on substantial profits during the latest gathering. According to the on-chain analytics platform Santiment, Bitcoin holders who have owned the asset for 90 to 365 days have been reaping profits above $100K thresholds.

On the other hand, those who held for a longer period and were actively trading between $90,000 and $100,000, displayed noticeably reduced activity when the price moved beyond $100,000.

Bitcoin Price Retracement Likely This Week

If historical patterns persist, it’s probable that Bitcoin’s price may experience a dip this week. As we move into week 7 of its current price trend, well-known crypto analyst Rekt Capital anticipates a potential pullback. Referencing data from past market cycles, the analyst points out:

  • In 2013, Bitcoin experienced a pullback during Week 7 of price discovery.
  • In 2017, the cryptocurrency retraced by 34% in Week 8.
  • In 2021, Bitcoin saw a 16% decline in Week 6.

In essence, if Bitcoin follows its past pattern, we might witness another dip that could drive the price below the $100K mark. Keep in mind, such declines are typical for Bitcoin’s market cycle, as they swiftly undo gains made over a period of weeks, according to Rekt Capital’s analysis.

Arthur Hayes, one of the co-founders of BitMEX, anticipates a market correction and has predicted a significant drop in prices around January 20th – the day Donald Trump was inaugurated as President. Hayes also mentioned that his Maelstrom investment fund is planning to reduce some of its positions in preparation for the expected market volatility.

Instead of selling off their investments, some traders might find themselves holding onto their Bitcoin, contrary to the forecast made by prominent analysts like Peter Brandt, who anticipated the Bitcoin price could reach $125,000.

Currently, Bitcoin’s price stands 2.5% lower at approximately $103,820, and its daily trading volume has decreased by 10%. Additionally, data from Coinglass indicates a total of $71 million in Bitcoin liquidation over the past 24 hours, with about $48 million being long liquidations.

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2024-12-18 08:56