Recently, the price of Bitcoin has fallen below the important price of $104,000 due to many factors. Among them, the Federal Reserve’s interest rate decision today is undoubtedly one of the key factors.
In the Asian session, Bitcoin encountered extremely strong selling pressure, and its price fell below $104,000 before the Fed's interest rate decision was released. Previously, the market generally held the basic expectation that the central bank would cut interest rates by 25 basis points, which should have brought some optimism, but the actual situation was not so simple.
It is worth noting that traders are now cautious and are waiting before taking the next step. Arthur Hayes, a billionaire in the cryptocurrency field, made an early prediction that Bitcoin and the entire cryptocurrency market will experience major turbulence during Donald Trump’s swearing-in ceremony on January 20.
Just hours before the Fed’s rate cut decision was announced, the selling pressure on Bitcoin prices became more and more obvious, and finally fell below $104,000. Mark Cabana, an executive at Bank of America, pointed out that the US central bank is indeed likely to announce a 25 basis point rate cut due to concerns about maintaining a tight monetary policy for too long. Although the current labor market has shown signs of easing, the inflation problem remains thorny. The consumer price index (CPI) in November soared to 2.8% from 2.4% in September, which undoubtedly adds many variables to the direction of monetary policy.
While the market has priced in a 25 basis point rate cut, analysts are still curious about Fed Chairman Powell’s comments on monetary policy in 2025. Against the backdrop of rising inflation, the Fed could reduce its original four rate cuts to three in 2025, a potential change that would mean the U.S. central bank could once again take a hawkish stance in an effort to get inflation below the desired 2% target. As Kurt S Altrichter, founder of Ivory Hill Wealth, noted, “Tomorrow’s Fed meeting is not just about expected rate cuts, but about the Fed’s commitment to cut rates in 2025. The more rate cuts, the better for stocks and bonds; the fewer rate cuts, the stronger the expectation of a market correction.”
Judging from the on-chain data, it also indicates that the current market sell-off is not accidental. In this uncertain environment, short-term holders have chosen to take a large number of profits in recent market changes. The on-chain analysis platform Santiment released a report saying that those who hold Bitcoin assets for 90 to 365 days have taken profit operations when the price is in the profit range of more than $100,000. In contrast, long-term holders who are active in the price range of $90,000 to $100,000 have significantly reduced their trading activities once the price exceeds $100,000.
Looking at the price trend of Bitcoin this week, if the historical pattern repeats itself, there is a high probability that there will be a certain degree of retracement. As Bitcoin enters the 7th week of price discovery, Rekt Capital, a popular cryptocurrency analyst, has made an expectation of a market correction based on data from past cycles. Looking back at history, in 2013, Bitcoin experienced a correction in the 7th week of price discovery; in 2017, the cryptocurrency had a 34% retracement in the 8th week; in 2021, Bitcoin fell 16% in the 6th week. Therefore, if Bitcoin continues its historical trajectory, a similar correction may occur again, and its price may even fall below $100,000. Rekt Capital also reminds everyone that this type of adjustment is actually a normal part of the Bitcoin cycle. In the past, it has wiped out the gains of the previous few weeks in a short period of time.
BitMEX co-founder Arthur Hayes similarly predicted a market correction and predicted a sharp decline around January 20, the day President Donald Trump is inaugurated. Hayes added that his Maelstrom Investment Fund was already planning to reduce certain investment positions ahead of the expected market turmoil.
As traders liquidate, investors may not be tempted to sell their holdings, as some top analysts, including Peter Brandt, predict that Bitcoin prices could reach $125,000.
As of press time, the price of Bitcoin has fallen by 2.3% to $104,212, and the daily trading volume has also fallen by 10%. According to Coinglass liquidation data, the liquidation amount of Bitcoin in the past 24 hours reached $71 million, of which the long liquidation amount was $48 million. In short, the Bitcoin market is currently in a complex and volatile situation. Shorting is still not recommended because the overall trend is still upward. You can find some support levels to take long positions at low points.
Can Bitcoin reach the 110,000 mark? Leave your thoughts in the comments.
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