Bitcoin Price Forecast: Support at Risk?

What to Know:

• Bitcoin experienced a significant sell-off, mirroring declines in traditional markets but underperforming compared to the Nasdaq and gold.
• Analysts are divided on the severity of the correction, with some viewing current levels as a compelling entry point while others anticipate a deeper pullback to $70,000.
• The article highlights the impact of macroeconomic uncertainty and risk aversion on Bitcoin’s performance, questioning its role as a true “digital gold” in the current market environment.

Amid broad traditional market declines, the crypto market, led by Bitcoin, experienced a notable downturn. Modest overnight declines in crypto assets intensified during the U.S. morning session, contrasting with partial recoveries observed in the Nasdaq and gold markets. Bitcoin, specifically, struggled to rebound, raising concerns about a potential break below its two-month trading range and the possibility of a more substantial correction.

Bitcoin’s Price Action and Key Support Levels

Bitcoin’s recent price action has been closely watched by analysts, with the $84,000 level identified as a critical support. A failure to hold this level could open the door for further declines, potentially targeting $80,000, where buyers previously stepped in during November, or even the $75,000 lows seen during the “April 2025 tariff tantrum.” Despite the current bearish sentiment, some analysts, like Matt Mena from 21Shares, view the present prices as a “compelling entry point.” Mena maintains a bullish outlook, anticipating Bitcoin to reach $100,000 by the end of the first quarter, with the potential to surge to a new record of $128,000 if macroeconomic conditions become more favorable. This perspective suggests that while short-term volatility is expected, the long-term potential of Bitcoin remains intact.

Analyzing the Broader Market Correction

Other analysts, such as John Glover, CIO of Bitcoin lender Ledn, suggest that the current selloff is part of a broader correction from the October record highs. Glover argues that this correction could potentially drag Bitcoin down to $71,000, representing a 43% decline from the early October level of $126,000. This perspective highlights the significance of understanding market cycles and the potential for more substantial pullbacks even within a bullish long-term trend. The contrasting views among analysts underscore the inherent uncertainty in forecasting Bitcoin’s price movements, emphasizing the need for investors to conduct thorough research and consider multiple scenarios.

Macroeconomic Factors and Bitcoin’s Role as “Digital Gold”

The U.S.’s role as a source of market uncertainty is also a key factor influencing investor behavior. According to Glover, investors are currently favoring alternative safe havens like gold and the Swiss franc over traditional assets like the U.S. dollar and Treasuries. This shift in preference raises questions about Bitcoin’s perceived role as “digital gold.” Despite expectations that Bitcoin would act as a safe-haven asset, it is still being treated as a risk asset and experiencing sell-offs alongside equities. This correlation with traditional risk assets suggests that Bitcoin has not yet fully decoupled from broader market sentiment and macroeconomic factors.

Technical Outlook and Future Expectations for Bitcoin

Russell Thompson, chief investment officer at Hilbert Group, notes that “the technical levels have all been taken out on the downside,” suggesting limited immediate support for Bitcoin. Thompson also believes that Bitcoin could drop as low as $70,000. While acknowledging positive developments such as the Clarity markup, Thompson emphasizes the prevailing risk-off sentiment driving market movements. Despite the short-term bearish outlook, many analysts remain optimistic about Bitcoin’s long-term prospects. Glover, for example, believes that the current difficulties are “somewhat temporary” and anticipates a rebound in Bitcoin prices in the coming quarters. This forward-looking perspective suggests that while the market may experience periods of volatility and correction, the underlying fundamentals and adoption of Bitcoin remain strong. The potential approval of spot Bitcoin ETFs could also play a significant role in driving institutional investment and further legitimizing Bitcoin as an asset class. Furthermore, regulatory clarity surrounding cryptocurrencies, including XRP and other digital assets, will be crucial in fostering a more stable and predictable market environment.

The recent Bitcoin sell-off reflects broader market anxieties and highlights the asset’s ongoing correlation with risk sentiment. While analysts are divided on the extent of the correction, many remain optimistic about Bitcoin’s long-term potential, anticipating a rebound in the coming quarters as macroeconomic conditions stabilize and institutional adoption continues to grow.

Related: XRP Lending Signals Crypto Demand at SBI

Source: Original article