Key Points
- Bitcoin’s price may drop to $85K due to increased volatility and a bearish market trend.
- Despite the bearish outlook, Bitcoin whales continue to accumulate more coins.
Bitcoin’s price has seen a bearish turn in recent days, following a potential false surge above $100K. The leading cryptocurrency saw a drop of over 5% in the past 24 hours, trading at around $95.9K on Wednesday, January 8, during the mid-London session. This increased volatility in the crypto market resulted in more than $711 million being liquidated, with most involving long traders.
Technical Analysis and Predictions
Bitcoin’s price slipped below the important support range between $97K and $99K, indicating a further midterm correction. From a technical analysis perspective, Bitcoin’s price has been forming a potential reversal pattern characterized by a head and shoulders (H&S) pattern, along with a bearish divergence of the Relative Strength Index (RSI).
As a result, Bitcoin’s price is likely to drop to the recently established support level of around $92K. Bitcoin’s price has already closed two days below the 50-day Moving Average (MA), suggesting that the bears are taking control. If the support level around $92K fails to hold in the coming days, Changpeng Zhao’s prediction of Bitcoin’s price dropping from $100K to $85K might come true.
Bitcoin Whales Continue to Accumulate
Despite the bearish outlook for Bitcoin, on-chain data shows that whale investors are still accumulating more Bitcoin. With major central banks acknowledging the interesting nature of Bitcoin, more gold investors are shifting their funds to Bitcoin products to hedge against constant inflation and ongoing fiat devaluations around the world.
In the past 24 hours, the supply of Bitcoin on centralized exchanges declined by around 11,783 coins, reaching about 2.19 million, a new multi-year low. US spot Bitcoin ETF issuers, led by BlackRock, have continued to purchase in the past few days. On Tuesday, BlackRock’s IBIT led the US spot BTC ETF issuers with a net cash inflow of onboarding $596 million.
However, due to significant cash outflows to the rest of the ETF issuers, the net cash inflows to Bitcoin’s investment product on Tuesday were about $52 million.
Positive Outlook Despite Bearish Trend
The cryptocurrency macro bull run, which began almost two years ago, will likely continue in the near term following the much-anticipated inauguration of President-elect Donald Trump in two weeks. Although Trump’s inauguration later this month could turn out to be a sell-the-news event, the expected positive crypto regulations will have a profound bullish impact in the long term.
Already, more nation-states, led by the Czech Republic, have been discussing adopting Bitcoin as a hedge against inflation amid the expected implementation of a strategic Bitcoin reserve by the United States.
Bitcoin’s price is likely to rally beyond $110K soon, fueled by rising demand from whale investors. From a technical standpoint, Bitcoin’s macro bull run does not peak until the monthly Relative Strength Index hits 90 percent.
