Bitcoin has entered a major downturn, dropping below $92,000, its lowest since breaking above $100,000 in early December. As 2024 draws to a close, profit taking by long-term holders and macroeconomic factors could push the largest cryptocurrencies to new lows in a matter of weeks.
Investors, especially those holding Bitcoin for the long term, may also be seizing an opportunity to cash out after a year of impressive growth in which the digital asset soared more than 100%.
Profit taking and market psychology
Bitcoin’s continued price decline is at $93,594 at the time of publication, representing a 16% drop from its December 17 peak of $108,000, according to CoinMarketCap data. The decline has also affected other cryptocurrencies such as Ether (ETH) and Solana (SOL), and comes amid broader financial market pressure.
Fundamentally, the main driver of Bitcoin’s decline is profit taking by long-term holders who have benefited from Bitcoin’s significant price increase this year.
While profit taking is an important factor, macroeconomic conditions also play an important role. Uncertainty surrounding the U.S. Federal Reserve’s interest rate policy, particularly the likelihood that interest rate cuts will be suspended until March 2025, has heightened investor caution.
Sentiment in the crypto industry remains fragile as the US market declines, with indexes such as the S&P 500 and Nasdaq down more than 1%. Despite significant acquisitions from major players such as MicroStrategy and Tether, Bitcoin technical indicators suggest that the price could face further decline.
MicroStrategy purchased an additional 2,138 BTC, bringing its total holdings to 446,400 BTC. Tether has also continued to increase its Bitcoin reserves and now holds $7.7 billion worth of the cryptocurrency.
MicroStrategy acquired 2,138 BTC for approximately $209 million at approximately $97,837 per Bitcoin, achieving a BTC yield of 47.8% QTD and 74.1% YTD. As of December 29, 2024, we have 446,400 people $BTC It was acquired for about $27.9 billion at about $62,428 per Bitcoin. $MSTR https://t.co/58aXM7g6u2
— Michael Saylor ⚡️ (@saylor) December 30, 2024
However, despite these acquisitions, the price of Bitcoin continues to trend downwards, indicating that the market may not be ready for a recovery yet. Technical analysis reveals that Bitcoin is struggling to maintain key support levels.
Bitcoin technical outlook
On the daily chart, the cryptocurrency reversed its 50-day exponential moving average into resistance and tested the key support level at $91,883 before rebounding to $94,325. However, BTC is still above the $200 moving average, which is acting as support.
It is important to note that if the price falls below the $91,000 support level, it could fall further before we see a change in trend. In this case, the potential levels to look at are $72, 341, 67, 928, or $61,152. Moreover, the Relative Strength Index (RSI) is above the oversold zone of 44, meaning that prices are likely to fall further, at least in the short term.
Looking ahead to 2025, the outlook for Bitcoin remains uncertain. Although cryptocurrencies have seen impressive gains in 2024, the market may enter a consolidation or bear market phase. The path forward for top digital assets is less clear, and 2025 could see further volatility.
This article was written by Jared Kirui from www.financemagnates.com.
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