Bitcoin’s (BTC) recent bearish engulfing candle formation after retesting the $100,000 level has raised concerns about a potential correction below $90,000. On Jan. 8, Bitcoin (BTC) experienced its second-steepest daily decline in 19 weeks, adding to market uncertainty.
Key Factors Behind Bitcoin’s Potential Decline
Stablecoin Supply Signals Liquidity Expansion
Bitcoin's (BTC) flash crash from $102,760 to $92,500 was triggered by stronger-than-expected U.S. job market data, which signalled economic strength and pressured equities and crypto markets. Despite this, analysts suggest the increased supply of stablecoins may fuel future capital inflows into Bitcoin.
Crypto analyst Miles Deutscher highlighted that stablecoins have entered "price discovery," signalling liquidity availability that could support a BTC recovery in the coming months. Similarly, market analyst Jamie Coutts emphasized that increased liquidity, paired with strong dollar performance, points to higher Bitcoin prices within six months.
Binance Spot Volumes Reach All-Time High
Data from Binance spot markets indicates a progressive rise in USD volumes, with America's market share hitting an all-time high of 42% in the 2024-2025 session. This growth underlines the strength of the current market and suggests robust demand for BTC.
Does On-Chain Data Indicate Recovery?
Despite these positive liquidity signals, Bitcoin’s 5.15% drop has erased four days of bullish momentum. Historical data shows that BTC has only recovered immediately after such dips 20% of the time.
Out of 15 pullbacks of 5% or more since January 2024, Bitcoin has registered an immediate rebound on just three occasions, suggesting a low probability of an uptrend in the short term.
Analysts' Predictions for Bitcoin Price
Crypto trader Krillin predicts that Bitcoin could consolidate between $92,000 and $90,000 throughout January before a potential market pump in February. Similarly, investor Jelle expects BTC to take out equal lows of around $90,000 before aiming for new highs.
If Bitcoin closes below $90,000 on the daily chart, analysts warn of a deeper crash. A confirmed inverse head-and-shoulders pattern could lead to a further 20% drop, potentially targeting $71,500.
