Bitcoin’s recent price action has been bearish with analysts warning of deeper declines before any recovery materializes. The ongoing Bitcoin price warning stems from macroeconomic pressures and technical indicators pointing to a potential new low for the flagship cryptocurrency.
Bitcoin Drops $12,000 in Two Days
Bitcoin’s price plummeted by $12,000 within 48 hours, halting what many hoped was the start of a sustainable bull market. On December 19, BTC panicked investors as it plunged to $96,000, marking a steep correction. The combined crypto market liquidations in the 24 hours following the drop totaled nearly $900 million, according to data from CoinGlass.
The unexpected downturn has rattled retail and institutional investors alike. Figures from Farside Investors, a UK-based investment firm, show record net outflows of $679 million from U.S. spot Bitcoin exchange-traded funds (ETFs).
“This sell-off underscores the fragility of the market amid heightened macro uncertainty,” said Jane Mitchell, senior analyst at Farside Investors.
Deeper Lows Expected
Market watchers are now aligning on even lower targets for Bitcoin. Popular X commentator and crypto analyst BitQuant, known for his bullish long-term projections, has cautioned that the recent drop to $90,000 was not the market’s bottom.
“Sorry, but no, $90K was not the dip,” BitQuant responded to a query about where Bitcoin might find support. Using Elliott Wave theory, BitQuant has forecast a possible BTC price retracement to the mid-$80,000 range.
“For those not planning to buy the next dip, I recommend stepping away from the charts and enjoying life until the spaceship to the moon is refueled,” he advised in a recent post.
Onchain data platform Whalemap supports this Bitcoin price warning, highlighting significant accumulation zones that suggest the possibility of further declines.
“Onchain Volume Profile shows massive accumulation at $60K–$67K,” the Whalemap team shared on X. “For long-term HODLers, the macro risk-reward remains clear, but we don’t expect BTC to dip below $60K soon.”
Macroeconomic Shifts Add Pressure
The Federal Reserve’s recent policy adjustment has played a critical role in Bitcoin’s downturn. By reducing its projected pace of interest-rate cuts for 2025, the Fed has fueled fears of prolonged monetary tightening.
QCP Capital, a prominent trading firm, noted in its latest bulletin that the broader market was primed for a shock after a prolonged risk-asset rally.
“While it is easy to blame the sell-off on the Fed’s hawkish stance, the root cause lies in the market’s overly bullish positioning,” QCP Capital explained. “Since the election, risk assets have enjoyed an impressive one-sided run, leaving the market extremely vulnerable to any shocks.”
Despite the grim outlook, some experts believe the recent sell-off could serve as a necessary correction to reset overinflated market expectations.
“This flush, while painful, was somewhat cathartic,” said Mark Thompson, a senior strategist at CryptoMetrics. “It removed much of the speculative froth and is setting the stage for a more sustainable rally when macro conditions improve.”
However, Thompson warned that any recovery would hinge on the Federal Reserve’s monetary policy and broader economic indicators.
Institutional and Retail Sentiment
The current Bitcoin price warning has spooked both institutional and retail investors. The rapid sell-off has sparked debates about Bitcoin’s status as a safe-haven asset.
“It’s clear that Bitcoin is still highly correlated with broader risk assets,” said Samantha Lee, a blockchain analyst at Blockchain Research Lab. “Until we see decoupling, Bitcoin will remain vulnerable to macroeconomic headwinds.”
On the retail side, many investors have adopted a wait-and-see approach. According to a recent survey by CryptoSentiment, over 40% of retail investors plan to hold their positions, while 35% are waiting for clearer signs of a bottom before re-entering the market.
Final Thoughts
As of December 20, Bitcoin was trading at approximately $97,000, according to Cointelegraph Markets Pro and TradingView. While the price has stabilized compared to its recent low, analysts maintain that the market is far from out of the woods.
With macroeconomic uncertainties and technical analysis pointing to further declines, the current Bitcoin price warning serves as a stark reminder of the cryptocurrency market’s inherent volatility.
Get more from The Bit Gazette
