Analysis of Bitcoin’s Potential Drop to $70,000
The cryptocurrency market, particularly Bitcoin, has been under scrutiny lately due to various macroeconomic factors and the upcoming inauguration of President-elect Donald Trump. Bitcoin’s price trend has become increasingly intertwined with U.S. macro moves, making it one of the most easily liquidable risk assets influenced by macroeconomic updates. As of January 14, 2025, Bitcoin trades above $96,000, recovering from a flash crash under $90,000 and macroeconomic headwinds the previous week.
Bitcoin Market Movers and the Trump Effect
President-elect Donald Trump’s inauguration on January 20 is a key event that traders are watching closely. Trump has been clear about his expectations from the Federal Reserve and has promised a strategic Bitcoin reserve for the U.S. The proposed Bitcoin Act by Senator Cynthia Lummis would establish a Strategic Bitcoin Reserve in the U.S., with dollar-denominated debt used to buy 1,000,000 BTC, or just under 5% of the total fully diluted supply of Bitcoin, over the next five years. Analysts at 10X Research remain cautious ahead of Trump’s term, observing that market drivers are weak, and Bitcoin is likely to remain range-bound until mid-March.
Institutional Appetite for Bitcoin Cools Down, Sentiment Deteriorates
Research by AmberData shows that institutions have drastically scaled back their inflows to U.S.-based Spot Bitcoin ETFs and have likely paused new allocations amidst the recent price retreat. This move signals a risk-off behavior by institutional investors. The Bitcoin Fear & Greed index has also deteriorated in the first two weeks of January, raising caution among traders. Data from Swissblock insights maps the deterioration of BTC sentiment, with the fear and greed index lower as Bitcoin slipped to its $90,000 low.
Bitcoin On-Chain and Derivatives Data Analysis
Coinglass data indicates that open interest and options trade volume have climbed in the past 24 hours. Derivatives traders are positioning themselves for a continued upside ahead of Trump’s inauguration, and sudden BTC price moves could trigger a slew of long liquidations, leaving traders exposed to the negative impact on their portfolio. The Bitcoin log chart and Market value to realized value ratio on 10X Research show that the token is reaching levels historically associated with profit-taking by “smart money,” meaning large wallet investors and institutions. The MVRV ratio has reached 2.7x, which typically triggers profit-taking by BTC holders, as observed in previous instances.
Expert Commentary on Where Bitcoin is Headed
Experts like Keith Alan, co-founder of Material Indicators, warn of a potential decline to Bitcoin’s 2021 all-time high of $69,000. Sergei Gorev, head of risk at YouHodler, notes that cryptocurrency quotes show negative dynamics against decreasing volumes of cryptocurrency trading, with the medium-term vector of movement still unclear to traders. Matteo Bottacini and the Crypto Finance team note Bitcoin’s quick recovery from its dip under $90,000, with the first key inflection point for a higher range at $96,800 and BTC holding steady above support at $92,000.
Technical Analysis and Bitcoin Price Forecast
Bitcoin is currently consolidating around the $96,600 level, with two imbalance zones or support levels for Bitcoin on the daily price chart. The first one is between $81,500 and $85,072, and the second lies between $76,900 and $80,216. The $70,000 level is a key support for Bitcoin and comes into play once BTC fails to bounce from the two support zones and continues its decline. A 27% drop from the current price could push Bitcoin to test the $70,000 level as support, erasing all gains in Bitcoin since November 5, 2024.
Predictions
Based on the analysis, there is a strong probability that Bitcoin’s price could drop to $70,000 due to various factors, including:
- The upcoming inauguration of President-elect Donald Trump and its potential impact on the cryptocurrency market
- The cooling down of institutional appetite for Bitcoin and deteriorating sentiment among traders
- The on-chain and derivatives data analysis indicating profit-taking by “smart money” and a potential correction in Bitcoin price
- Expert commentary warning of a potential decline to Bitcoin’s 2021 all-time high of $69,000
- Technical analysis indicating a potential drop to $70,000 if Bitcoin fails to bounce from the two support zones and continues its decline
Overall, the cryptocurrency market, particularly Bitcoin, is facing a high level of uncertainty and volatility, and traders should be cautious and prepared for potential price fluctuations.
