Is This The Bottom? Experts Weigh In On Bitcoin 13% Dip And Potential Recovery

by

As a seasoned researcher with over two decades of experience in financial markets, I have witnessed numerous bull and bear runs throughout my career. The current volatility in the Bitcoin market, while intimidating to some, is not entirely unexpected given the meteoric rise it has experienced this year.

In the past eight weeks, Bitcoin (BTC) has seen a drop over seven days, primarily due to cautious indications from the U.S. Federal Reserve (Fed), causing traders to liquidate their holdings. This digital currency has surged beyond doubling its worth in 2021.

Bitcoin Rebounds To $97,500 After Historic ETF Outflow

On Friday, the predominant cryptocurrency experienced a decline of up to 5.3%, reaching $92,149. This drop followed a new record high of over $108,000 set earlier in the week. However, since then, the Bitcoin price has rebounded and is currently hovering around the $97,500 mark. Since Sunday, it has decreased by approximately 5%.

Even though U.S. stocks have largely performed well, smaller digital currencies like Ethereum (ETH) and Dogecoin (DOGE) have also been impacted by this economic downturn.

As a crypto investor, I’ve noticed a noticeable change in the general mood, and it’s become more evident with the substantial withdrawal from Bitcoin-investing US exchange-traded funds (ETFs) over the past few days. On Thursday alone, these ETFs experienced an unprecedented outflow of approximately $680 million, marking the end of a 15-day streak where inflows were recorded, as reported by Bloomberg’s data compilation.

The increased unpredictability in the cryptocurrency market is linked to a surge that started following Donald Trump’s win as the U.S. President on November 8, 2016.

Experts at QCP Capital observe that the market sentiment has turned excessively optimistic, making digital assets potentially vulnerable to shifts in the Federal Reserve’s stance on inflation management.

Shifting attention now lies on how quickly conventional financial institutions might integrate cryptocurrencies, following the U.S. Federal Reserve’s hint of a possible deceleration in its easing policies as announced by Chairman Powell on Wednesday.

Historical Patterns Suggest Potential Rebound For BTC’s Price 

According to a recent statement by Hani Abuagla, a senior market analyst at XTB, the combination of monetary policy, institutional acceptance, and political events indicates that Bitcoin’s value will continue to be influenced by both broad economic trends and crypto-related triggers until 2025.

According to Chris Weston, who leads research at Pepperstone Group, there’s a need for careful navigation in the near future. Weston observes that although a crash in price isn’t imminent right now, the force driving Bitcoin’s recent surge appears to be slowing down, suggesting a possible change in market direction.

Market analyst Lark Davis offered a different perspective, indicating that past trends might indicate an upturn in the market within the next few days, providing comfort to investors.

In December 2020, Bitcoin went through a 12% decline after rising by an impressive 77% over the previous months. However, it quickly rebounded, increasing from $17,000 to $41,000 – that’s a massive 136% jump – in just 23 days.

According to Davis, Bitcoin might be going through something similar to what it did after a strong Q4, with a possible drop of around 13%. He admits that there could be another correction of up to 15%, but he remains hopeful for further growth in the bitcoin market.

Read More

2024-12-21 09:04