Bitcoin is facing a potential price correction, with analysts warning of a possible 20-30% drop as crypto markets experience significant liquidations. Over the past 24 hours, approximately $1.1 billion has been liquidated across the cryptocurrency market, contributing to the current bearish sentiment.
Current Market Conditions
Bitcoin (BTC) has slipped below the $110,000 mark, trading around $108,590, reflecting weakened investor confidence and increasing selling pressure. This decline follows a failure to break past the $115,000 resistance level, a threshold that has proven difficult to overcome in recent weeks. The current price hovers just above the critical support level of $108,000. A break below this support could lead to further declines, potentially testing the $102,000 demand block.
Technical Analysis
Technical analysis indicates that Bitcoin is currently trapped between its 100-day moving average (MA) at $114,000 and its 200-day MA at $109,000. The recent rejection from the 100-day MA has triggered renewed selling pressure, highlighting the significance of this consolidation zone. A decisive close above $116,000 could signal renewed strength, potentially paving the way for a rally towards $120,000-$122,000. However, failure to hold the $109,000-$110,000 region could extend the corrective phase towards the $102,000-$104,000 range.
On the 4-hour chart, Bitcoin continues to respect an ascending trendline connecting higher lows formed since mid-October. The pullback from the $116,000 resistance has driven the price back towards this rising support, aligning with the $108,000-$109,000 high-liquidity area. A rebound from this level would validate the ongoing bullish structure and potentially initiate another move towards $115,000-$116,000.
Factors Influencing the Downturn
Several factors are contributing to the current market conditions:
- Federal Reserve's Stance: Recent cautious remarks from Federal Reserve Chair Jerome Powell have unsettled investors. Powell suggested that the recent 25-basis-point rate cut might be the last for 2025, leading to increased caution regarding monetary policy. This hawkish stance from the Federal Reserve could strengthen the U.S. Dollar, potentially weighing on cryptocurrencies.
- US-China Trade Tensions: Rising trade tensions between the U.S. and China have also contributed to the market's uncertainty. Mixed signals from U.S.-China talks have further amplified risk-off sentiment among investors.
- Long-Term Holder Behavior: Continued selling by long-term Bitcoin holders is restricting Bitcoin's growth. Many investors who accumulated Bitcoin during prior highs appear to be taking profits, creating additional headwinds for the cryptocurrency.
- ETF Outflows: Bitcoin ETFs experienced significant outflows recently, with US-listed spot Bitcoin ETFs recording $470.70 million in outflows on Wednesday, ending a four-day inflow streak.
Potential Rebound and Key Levels to Watch
Despite the current volatility, analysts suggest that a recovery above $110,000 could open the door for a move towards the $115,000 resistance zone if ETF inflows remain strong and macro headwinds ease. Key levels to watch include the $115,000 and $117,600 resistance levels, with a breakout potentially leading to $120,500 or even $124,150. Conversely, a fall below $108,000 could drag prices toward $105,500.
Broader Market Impact
The overall crypto market has reflected this risk-off sentiment. Ethereum (ETH) has dropped, along with XRP, Solana, and Dogecoin. This widespread decline underscores the interconnectedness of the cryptocurrency market and the impact of Bitcoin's performance on other digital assets.
