Bitcoin immediately formed a bearish engulfing candle after retesting $100,000, opening the door for a potential pullback below $90,000.
On January 8, Bitcoin's price fell again, forming a bearish engulfing candle on the daily chart. This day’s decline is the second largest drop in BTC in 19 weeks.
As market dynamics lean towards uncertainty, Bitcoin traders and commentators have expressed their views on the possibility of further declines below $90,000.
Stablecoin supply has entered the 'price discovery' phase.
After the U.S. Bureau of Labor Statistics reported 8.1 million new jobs in late November, Bitcoin plummeted from $102,760 to $92,500. This figure is above the expected 7.74 million, indicating that the U.S. economy is improving, which led to weakness in the stock and cryptocurrency markets.
While this development has sparked speculation about broader bearish outcomes, cryptocurrency analyst Miles Deutcher emphasizes that the stablecoin supply has entered the 'price discovery' phase, indicating that there is more liquidity in the current cryptocurrency ecosystem. The increase in stablecoin supply highlights the potential for increased capital inflows in the coming months.
Similarly, market analyst Jamie Coutts states that more liquidity will flow in, potentially leading to a rise in BTC prices within six months. Based on the strengthening dollar, Coutts suggests that Bitcoin's price could drop to as low as $80,000. However, the potential strength of BTC market bids indicates that market expectations remain much higher.
Compared to previous rebounds, the current bull market has clearly shown more liquidity. Data analyst Roman Zinovyev recently emphasized that the USD trading volume on the Binance spot market has been steadily increasing since 2020. As shown, during the period of 2024-2025, the US market share reached a historic high of 42%.
Does Bitcoin's on-chain data indicate a recovery?
Strong on-chain development does not offset the 5.15% decline in Bitcoin that erased four days of bullish price action. The likelihood of a quick recovery after a decline of greater than or equal to 5% is also discouraging.
As shown in the figure, since January 2024, Bitcoin has experienced 15 pullbacks of 5% or more. Of these 15 instances, BTC has risen immediately three times, which is only 20% of the time. Therefore, from a probabilistic perspective, it is currently unlikely that BTC will experience an impulsive upward trend.
Cryptocurrency trader Krillin suggests that Bitcoin's price might accumulate between $92,000 and $90,000 in January, followed by a market surge in the next month.
Cryptocurrency and stock investor Jelle expressed a similar view after the existing market bids failed to keep BTC above $100,000. This investor expects the price to drop to around $90,000 and stated,
"Back to the original plan; wait for the low to be broken before setting new highs."
If the daily closing price is below $90,000, Bitcoin may decline further. Such a level would confirm a head-and-shoulders reversal pattern, which could have dire consequences. For instance, BTC could drop further by 20%, targeting a price of $71,500.
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