The price of Bitcoin ($BTC ) is undergoing a steep decline, falling sharply over the past three days. After a combined 8% drop on Wednesday and Thursday, Bitcoin continued its descent on Friday, trading around $95,000. Market participants are now questioning how much further this downward trajectory will extend.

Federal Reserve Commentary Triggers Market Downturn

The Federal Reserve's recent policy announcement has sent shockwaves across financial markets. Following a 25 basis point rate cut at the conclusion of the Federal Open Market Committee (FOMC) meeting on Wednesday, Fed Chair Jerome Powell delivered comments that seemingly unnerved investors. Powell indicated that only two rate adjustments are likely for 2025, a stance that appears to have dampened bullish market sentiment.

This conservative approach by the Fed was arguably predictable. With the central bank navigating the delicate balance between supporting economic growth and avoiding inflationary pressures, any signals of aggressive rate cuts could have fueled excessive market exuberance, potentially reigniting inflation concerns.

Adding to the bearish outlook, the Fed’s dot plot revealed that most members anticipate potential rate hikes, further stifling market optimism. While the accuracy of such predictions is often questioned, markets have seemingly taken these projections at face value.

Spot Bitcoin ETFs Record Significant Outflows

Investor sentiment towards Bitcoin has soured further, as evidenced by a record 6.71K BTC outflow from U.S. Spot Bitcoin ETFs on Thursday. This marked the end of a 15-day streak of consecutive net inflows, highlighting a growing caution among institutional and retail investors alike.

Technical Analysis: $89,400 as a Key Target

Short-Term Chart Overview

The 4-hour chart reveals a clear breakdown of Bitcoin’s ascending channel, a pattern that frequently results in downward price action. Bitcoin has already reached the critical Fibonacci retracement level of 0.786 at $95,000. If the current bearish momentum persists, the measured move from the breakdown points to a target of $89,400.

A move to this level would establish a lower low, potentially signaling the end of Bitcoin’s recent uptrend and paving the way for a more significant reversal.

Long-Term Chart Highlights Risk of Deeper Decline

The daily chart underscores the gravity of the situation. Should Bitcoin fail to stabilize at the $89,400 level, a more substantial decline toward $73,000 could be in the cards. This level offers robust market structure, providing a potential floor to halt further losses.

Momentum indicators, such as the Stochastic RSI, suggest that a short-term rebound may be on the horizon. However, whether this potential recovery will resume the broader uptrend or confirm a deeper downtrend remains uncertain.

Conclusion: Bitcoin at a Crossroads

Bitcoin’s current price action places it at a pivotal juncture. While short-term indicators hint at an upside correction, the overarching trend hangs in the balance. A decisive move below $89,400 could lead to a cascade of selling pressure, potentially driving prices toward $73,000 or lower.

Investors should remain cautious and closely monitor key support levels and macroeconomic developments to navigate this volatile period effectively. Bitcoin’s next move will likely determine whether the bull market can sustain itself or if a deeper correction looms on the horizon.

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