Since reaching an all-time high (ATH) price of $108,130 on December 17, Bitcoin (BTC) has been subject to intense selling pressure. By December 20, prices had receded to as low as $92,810 — and although the recovery was quick, the leading cryptocurrency has struggled to reclaim the $100,000 mark.
BTC did shoot up to $102,250 on January 7 — but it was not to last, as a quick correction followed. From then on, Bitcoin steadily traded at prices close to $95,000.
Now, on January 13, the premier digital asset experienced significant downward momentum — prices have dropped from a high of $95,900 to just $90,820 at press time.
Picks for you
Since the beginning of the year, BTC has lost 4.94% in value.
In spite of high hopes, it seems more likely than not that Bitcoin will see prices move below $90,000. A look at recent macroeconomic developments could hold a clue as to why.
Macroeconomic developments have put downward pressure on Bitcoin prices
Despite an anticipated slowdown, recent figures point to a robust recovery in the U.S. job market, with more than 250,000 jobs added in the last month of 2024. This far outpaced consensus estimates, which pegged job growth at roughly 165,000.
That might seem like good news at first glance, but a continually strong job market tends to cause inflation — and avoiding that scenario will likely be a priority for the incoming Trump administration.
So, what is the main mechanism for curtailing inflation? High interest rates — and at present, estimates are turning increasingly bearish. Barclays, for example, now expects just one 25bp Fed rate cut this year.
With interest rates likely to remain higher than what was originally expected, it’s only natural that some steam has been taken out of the bull run.
However, market dynamics shouldn’t be disregarded either. A vast swathe of investors and traders are in the green on BTC — and with a prolonged consolidation period at play, taking your profits and waiting for a more attractive price point for a new long position is a reasonable play.
Is the BTC bull run over?
While this recent development is quite bearish, numerous analysts maintain an optimistic outlook. Legendary cryptocurrency trader Peter Brandt suggested that Bitcoin could dip to as low as $73,018 before mounting a recovery and entering a new uptrend.
In much the same vein, noted crypto analyst Ali Martinez projected that a drop to $67,000 is possible while also highlighting a marked reduction in both capital inflows and Bitcoin network activity.
However, Martinez also highlighted a bull pennant pattern in a January 11 X post — if legitimate, the chart pattern hints at a recovery to $140,000, a move that would equate to a 54.15% rally.
Featured image via Shutterstock
