The ongoing Bitcoin correction was largely expected after registering impressive growth in the last two months of 2024.
Bitcoin price BTC $65 424 24h volatility: 2.3% Market cap: $1.31 T Vol. 24h: $48.72 B dropped over 3% in the past 24 hours to reach a daily range low of about $92,806. The altcoin industry followed the same bearish performance in the past 24 hours, thus resulting in liquidation of over $483 million, mostly involving long traders.
The fear of further crypto correction has significantly increased as Bitcoin price approaches a crucial support level above $92k. Furthermore, Bitcoin’s fear and greed index has dropped from 78% to 69% in the past two days.
As Coinspeaker explained, Bitcoin price is likely to continue in a bearish outlook after forming a potential head and shoulders (H&S) pattern coupled with a bearish divergence of the daily Relative Strength Index (RSI).
According to a popular trader Peter Brandt, BTC price on the daily time frame could be forming the Hump Slump Bump Dump Pump and Dump pattern. However, a consistent close below the support level above $92K will likely lead to a price drop to the range between $85K and $86K in the near term.
Top Reasons Why Bitcoin Price Dropped Today
Bitcoin price experienced heightened selling pressure after the revelation that the US government has received the green light to sell 69,370 BTCs seized from the defunct darknet marketplace Silk Road. The court’s decision to sell Bitcoins worth around $6.5 billion follows long legal battles over the ownership.
The liquidation of the Silk Road BTCs is set to be managed by the US Marshals service, which has been depositing funds into Coinbase Prime in the past few months.
Interestingly, the sale of the Silk Road’s Bitcoin trove comes a few days before the much anticipated second inauguration of President-elect Donald Trump. In the campaign trails, Trump promised to make the US government hold the 197K BTCs in addition to the strategic BTC reserve.
Bitcoin price experienced heightened selling pressure as all the US spot BTC ETF issuers registered a net cash outflow of $582 million. Fidelity’s FBTC and BlackRock’s IBIT registered a net cash outflow of about $258 million and $124 million respectively.
Market Outlook
The ongoing Bitcoin correction was largely expected after registering impressive growth in the last two months of 2024. Moreover, similar corrections happened in January of 2017 and 2021 before continuing with parabolic rally in the subsequent months.
The upcoming change of US administration to a pro-crypto regime will have a significant impact on Bitcoin price action in the coming months. Moreover, the adoption of Bitcoin by corporate investors has heightened in the past year following the impressive performance of MicroStrategy Inc (NASDAQ: MSTR) and the spot BTC ETF issuers.
Already, more nation-states have been looking into Bitcoin as a hedge against inflation following the GDP growth of El Salvador. Consequently, the supply of Bitcoin on centralized exchanges will continue to shrink as institutional investors accelerate the accumulation pace.
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