Here is why Bitcoin Retraced Below $90k Today
Bitcoin briefly surpassed the $100,000 mark on Friday, January 10th, this proved ephemeral, culminating in a three-day decline that found a temporary floor at approximately $92,000.
The recent dip in Bitcoin’s price below $90,000 marks a significant shift in the cryptocurrency market, driven primarily by a reassessment of Federal Reserve (Fed) policy following unexpectedly robust economic data.
The decline, initiated during the European trading hours on Monday, January 13th, 2025, represents a continuation of a trend that began late last week. While Bitcoin briefly surpassed the $100,000 mark on Friday, January 10th, this proved ephemeral, culminating in a three-day decline that found a temporary floor at approximately $92,000.
Technical Analysis on Bitcoin Dip
This downturn is multifaceted. From a technical analysis standpoint, the breach of the 50-day exponential moving average signals a bearish trend. However, the current price levels remain within the consolidation range established in mid-November, suggesting a degree of underlying support.
The broader cryptocurrency market mirrored Bitcoin’s negative trajectory, with significant losses observed in XRP, Cardano, and other major altcoins. The CoinDesk 20 Index, a benchmark for cryptocurrency market performance, experienced a decline exceeding 3%.
Contributing to the market volatility, speculation surrounds the potential impact of the Department of Justice (DoJ) liquidating its Silk Road Bitcoin holdings. Reports suggest the identification of a suspected wallet ID associated with these sales, a factor potentially exacerbating the sell-off.
Furthermore, the ongoing political climate, with the upcoming presidential inauguration on January 20th, contributes to the prevailing uncertainty and heightened volatility. While this instability presents risks, seasoned traders often view such periods as opportune for strategic investments.
Goldman Sachs on Fed Interest Rate Cut
The immediate trigger for Bitcoin’s decline appears to be the strong jobs report released on Friday, January 10th, 2025. This report, revealing a substantial increase in nonfarm payrolls (256,000) exceeding expectations and a decrease in the unemployment rate to 4.1%, significantly altered market sentiment regarding future Fed interest rate cuts.
While Goldman Sachs and JPMorgan maintain their projections for rate reductions, Bank of America (BofA) has expressed concerns, suggesting a possible extended pause or even a rate hike. This divergence in predictions underscores the uncertainty within the financial community.
The implications of this shift in Fed expectations are profound. The U.S. 10-year Treasury note yield, a highly sensitive indicator, has already experienced a substantial increase of 100 basis points since the September 18th rate cut.
Additionally, ING echoed BofA’s concerns, highlighting the potential for an extended pause in rate cuts, contingent upon the upcoming inflation figures.
