For the first time since mid-November 2024, Bitcoin's price has dipped below the psychologically significant $90,000 mark. This decline coincides with a broader drop in cryptocurrency values, sparking discussions among experts about the reasons behind this retreat and the market's future prospects. The primary cause of this sharp decline is attributed to changing macroeconomic expectations in traditional financial markets. But is this merely a temporary phenomenon, or does it signal deeper shifts within the industry?
As of the evening of January 13, 2024 (7:10 PM MSK), Bitcoin's price settled around $91,700, having dropped to a low of $89,200 during the day. Just a few weeks earlier, on January 7, BTC had reached a local peak of $102,700, only to lose 9% of its value thereafter. From its all-time high on December 17, 2023, the cryptocurrency has fallen by a substantial 15%.
Notably, this decline began after a robust growth of over 10% in the first week of January. Since the start of the year, Bitcoin has already lost about 2%, effectively erasing the gains of early 2024. This price behavior is driven by a combination of technical and fundamental factors, which deserve closer examination.
1. Shift in Federal Reserve Rate Expectations. The primary trigger for the decline was reports that the Federal Reserve might abandon its aggressive policy of lowering interest rates. Initially, investors assumed that the regulator would continue to cut rates to stimulate the economy, which positively impacted high-risk assets, including cryptocurrencies. However, the likelihood of policy easing has now been reassessed, negatively affecting all markets.
2. Weakening Optimism in the Crypto Industry. The beginning of 2024 saw a market revival following a strong rally at the end of 2023. However, the January correction revealed that strong, confident demand from major institutional investors is still lacking. It is quite possible that the market has entered a consolidation phase before a new growth wave.
3. General Sentiment in Traditional Markets. Corrections in cryptocurrencies often coincide with movements in traditional financial markets. Amid global economic uncertainty, investors prefer more reliable assets, such as government bonds or gold, temporarily avoiding risk.
Currently, most experts agree that the current decline in Bitcoin's value is short-term. Expectations regarding the future monetary policy of the Federal Reserve remain uncertain, and any news or change in the rhetoric of financial authorities could once again push the cryptocurrency's price upward.
However, some specialists warn that the key support level for Bitcoin remains at $85,000. Breaching this level could trigger a further downward spiral, especially if macroeconomic pressures persist.
In recent years, the cryptocurrency market has shown resilience even during significant corrections. Long-term investors understand that pullbacks are a natural part of the growth cycle, and the current situation may be no exception. Meanwhile, it is crucial to monitor macroeconomic statistics and central bank statements, as they can set the tone for the market in the coming months.
1 Comments
It's not for long... Bitcoin will rise above 100,000 dollars again😁