Bitcoin ($BTC) is facing a significant price drop, continuing its downward trajectory with a combined 8% loss over Wednesday and Thursday. As of Friday, the price hovers around $95,000, but many are asking: how much further will this plunge go?
📉 The Catalyst: Powell's Market Commentary
The latest wave of market turmoil can be largely attributed to Federal Reserve Chairman Jerome Powell’s comments after the FOMC meeting on Wednesday. While many anticipated a 25 basis point rate cut, Powell’s cautious tone about future interest rate cuts—saying there would likely be only two adjustments in 2025—sent shockwaves across markets, triggering a sharp downturn.
What Powell is doing makes sense from a policy perspective. By holding off on aggressive rate cuts, the Fed is attempting to balance between supporting the economy and preventing runaway inflation. However, market reactions often don't align with the Fed’s intentions, leading to sell-offs across assets, including Bitcoin.
📊 Spot Bitcoin ETFs: A Record Outflow
In response to the uncertainty, U.S. Spot Bitcoin ETFs saw a massive 6.71K BTC outflow on Thursday, ending a streak of 15 consecutive days of net inflows. This sudden outflow indicates investor caution and could signal a shift in sentiment, with traders pulling back from risky assets like Bitcoin amid broader market jitters.
📉 Price Analysis: Measuring the Next Move
On the 4-hour chart, Bitcoin has broken out of its ascending channel, a pattern that often signals a downward price movement. The price has now reached a key Fibonacci retracement level of 0.786, around $95,000. If the decline continues, the measured move suggests that Bitcoin could dip further to $89,400.
Such a move would mark a lower low in the price structure, potentially signaling the end of Bitcoin’s current uptrend. If the downtrend continues, a more substantial drop to $73,000 could be in play.
📉 The Possibility of a Nosedive to $73,000
On the daily chart, the outlook for Bitcoin appears even more precarious. If the price fails to halt its descent at $89,400, Bitcoin could plunge all the way to $73,000. However, this level provides a strong market structure that could act as support and prevent further declines.
The Stochastic RSI, found at the bottom of the chart, shows that momentum is nearing an oversold condition. This could signal that a reversal is on the horizon. Still, it’s unclear whether this will lead to a bounce back toward higher levels or confirm the downtrend, making $BTC’s next move highly uncertain.
🔮 What’s Next for Bitcoin?
Watch the support levels: If Bitcoin holds the $89,400 and $73,000 levels, we may see a potential rebound.
Be cautious with momentum: Despite the potential for an upside move, Bitcoin’s position remains volatile, and further downside risk is still in play.
Pro Tip for Traders: Stay alert to market news and Fed policy updates, as these will continue to impact Bitcoin and the broader market. Use risk management strategies like stop-losses to protect your investments in the volatile crypto landscape.
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