Why Bitcoin could shock traders with drop to $70,000, a deep dive
Bitcoin trades above $96,000 on Tuesday, January 14. The largest cryptocurrency has recovered from a flash crash under $90,000 and macroeconomic headwinds last week. Large scale profit-taking could push BTC to the support zones on the weekly chart, close to the $70,000 level.
Bitcoin market movers and the Trump effect
President elect-Donald Trump’s inauguration on January 20 is a key event that traders keep their eyes peeled. Trump looms large over cryptocurrencies, with his pro-crypto picks for Securities and Exchange Commission Chair, AI & Crypto Czar, and an expectation of pro-crypto regulation. Bitcoin price trend has grown increasingly intertwined with U.S. macro moves in the past few weeks. BTC and crypto represent one of the most easily liquidable risk assets, influencing their price with macroeconomic updates. Bitcoin started the day lower, opening above $94,000, and covered lost ground, reaching a high of $97,371 in today’s trading session.
The President-elect has been clear on his expectations from the Federal Reserve and promised a strategic Bitcoin reserve for the U.S. Crypto traders are concerned since the central bank is independent and the incoming President will not play a role in its decision-making. The Bitcoin Act proposed by Senator Cynthia Lummis would establish a Strategic Bitcoin Reserve in the U.S., and dollar-denominated debt would be used to buy 1,000,000 BTC, or just under 5% of the total fully diluted supply of Bitcoin in the next five years. Traders are watching for the “Trump effect” on Bitcoin’s price trend closer to the inauguration next week. Bitcoin analysts at 10X Research remain cautious ahead of Trump’s term. Analysts observe that market drivers are weak, and Bitcoin is likely to remain range-bound until mid-March. Even as crypto’s post-election honeymoon phase ends, the crypto industry that donated $238 million in the previous election cycle helped secure 298 pro-crypto lawmakers in Congress. It remains to be seen whether the relationship is reciprocal and could influence Bitcoin price in the long term.
Institutional appetite for Bitcoin cools down, sentiment deteriorates
AmberData research on Bitcoin ETF dynamics shows that institutions have drastically scaled back their inflows to U.S.-based Spot Bitcoin ETFs and likely paused new allocations amidst the recent price retreat. The move signals a risk-off behavior by institutional investors. Bitcoin traders’ short-term caution is likely to be followed by renewed conviction as BTC rallies towards its milestone of $100,000. As Bitcoin price stabilizes above $95,000, it could make or break the next leg of inflows to Spot Bitcoin ETFs. Research suggests that sustained inflows from major players like BlackRock would signal restored confidence, while continued outflows by 21Shares or Franklin Templeton might reinforce a risk-off narrative. Traders should monitor ETF allocations closely to predict Bitcoin price trends, to determine whether the asset consolidates or tests new levels in the coming weeks.
Data from Swissblock insights maps the deterioration of BTC sentiment in the first two weeks of January. As Bitcoin slipped to its $90,000 low, it raised caution among traders and sent the fear and greed index lower.
Technical analysis and Bitcoin price forecast
Bitcoin is currently consolidating around the $96,600 level. The BTC/USDT daily price chart shows the formation of two imbalance zones, or support levels for Bitcoin. 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. This could erase all gains in Bitcoin since November 5, 2024, meaning post-election BTC rally would be wiped out.
