Why Is Bitcoin Price Falling Today?

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As a seasoned analyst with over two decades of experience in the financial markets, I have seen my fair share of market fluctuations and economic uncertainties. Today’s Bitcoin price drop below $93K, while disappointing for many investors, is not entirely surprising given the current geopolitical climate and economic indicators.

After enduring numerous rejections at $100,000, the price of Bitcoin has fallen by 4%, reaching a low of $92,785 during the day. This is the most significant one-day decrease for Bitcoin since Donald Trump’s victory in the US elections. Several factors, such as the expiration of Bitcoin options, concerns about Trump’s tariffs, some investors cashing out their profits, and withdrawals from ETFs, may have contributed to today’s drop.

Why Bitcoin Price Tumbles Below $93K?

The cost of Bitcoin fell approximately 4%, dipping below $93,000 before subsequently rebounding above the significant resistance point of $94,000. However, optimism surrounding the $100K mark has noticeably decreased. Currently, Bitcoin’s price is hovering around a 4% decrease at $94,512, with its daily trading volume showing an increase of roughly 60% to reach $84.84 billion.

Donald Trump Raises Tariffs on Imports from China, Mexico, Canada

The recently elected U.S. President, Donald Trump, announced plans to implement extra taxes on goods imported from China, Mexico, and Canada according to a report by Reuters on November 26th. Consequently, the value of U.S. stock market futures dropped, and Bitcoin along with the overall cryptocurrency market also experienced increased selling pressure.

Conversely, the US dollar strengthened as the Dollar Index surged by 0.7%. Kieran Calder, the head of equity research for Asia at Union Bancaire Privee, shared this insight with Bloomberg:

The new president has begun his term with assertive moves, a tactic reminiscent of former President Trump’s approach, which might be unexpected to those who may have overlooked 2016-2020. Trump’s negotiation style typically follows this pattern: first, a direct confrontation or blow, followed by an invitation for negotiations.

On Monday, Trump’s comments caused a drop in market enthusiasm, which followed the appointment of Scott Bessent as U.S. Treasury Secretary during the weekend. Similarly, Bitcoin and other cryptocurrencies saw a decline in their value during the early trading hours in Asia on Tuesday.

According to Tony Sycamore, an analyst at IG Australia Pty Market, the recent retreat of Bitcoin is more about “correcting its overvaluation than signaling a downward trend or anything ominous.” He also emphasizes that markets, including crypto markets, don’t typically follow straight paths indefinitely.

In the meantime, the Trump administration intends to establish a cryptocurrency advisory group within the White House. This team will focus on creating a strategic plan for managing a Bitcoin reserve.

Bitcoin Price Volatility Before Monthly Expiry

Approximately $9.4 billion worth of Bitcoin options contracts are set to expire this Friday, potentially leading to significant price fluctuations for Bitcoin in the near future. According to data from Deribit derivatives, the put/call ratio stands at 0.83, with the maximum “pain point” occurring at around $78,000. In addition, daily trading volume of Bitcoin options has increased by a substantial 124% to $4.47 billion, while open interest has risen by 2%, reaching $42.6 billion.

Most of the attention in the open market is centered around call options with a strike price of $82,000 and put options with a strike price of $70,000. Based on the concept of maximum pain, it’s possible that the price might trend towards the $70,000 to $82,000 range.

Eyes on US PCE Inflation Data

On Wednesday, we’ll get a significant update on the main Personal Consumption Expenditures (PCE) data. This could serve as the catalyst for this week’s key events, leading to substantial shifts in the U.S. Dollar (USD) and Gold prices. Consequently, these developments might also have a ripple effect on U.S. equities, Bitcoin, and the broader cryptocurrency market.

The essential Personal Consumption Expenditures (PCE) index, a crucial indicator for measuring inflation, is expected to rise, possibly influencing the Federal Reserve’s policy on interest rates.

According to Chris Weston, an expert at Pepperstone, an increase in the main PCE index may lessen expectations of a rate decrease in December. This rise might suggest persistent inflationary forces, leading the Federal Reserve to keep existing interest rates steady to preserve economic balance.

What’s Next for BTC Price?

Following a dip below significant support at $94,000, well-known crypto analyst CrediBULL Crypto suggests exercising caution when adding more long positions for Bitcoin. He noted that this recent decline could potentially lead to a drop towards $80,000, though such a move might not occur right away.

As a crypto investor, I’ve just realized that what we thought was the start of a new significant upward push above 94k was actually part of a three-legged correction instead. This means our local high wasn’t the beginning of the next major impulse towards our upper targets as initially anticipated.

Stopped out of my BTC long and won’t take another position until I get more…

— CrediBULL Crypto (@CredibleCrypto) November 25, 2024

According to well-known Bitcoin analyst Joe Consorti, from September 2023 onwards, Bitcoin’s price has generally mirrored global M2 money supply patterns, with a delay of around 70 days. He warned that if this relationship continues, Bitcoin might experience a substantial drop of about 20-25% in the short term.

Contrarily, large entities are increasingly buying up Bitcoins. For instance, MicroStrategy recently bought 55,000 Bitcoin, and Bernstein analysts have increased their MSTR stock target to over $600 as a result. In a similar vein, Semler Scientific made a new Bitcoin purchase just yesterday.

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2024-11-26 09:08