The landscape in the cryptocurrency space can change drastically in days. Recall that bitcoin tapped a new all-time high of over $108,000 on Tuesday, but its price has slumped to $94,500 since then.
This came after a few remarks by Federal Reserve Chair Jerome Powell, who warned that the central bank could not purchase BTC despite Trump’s promises and that there might not be any more key interest rate reductions in 2025.
With bitcoin reacting the way it did to those comments, this has led to speculations among the crypto community about whether this is just another ‘normal’ correction during a bull market cycle or whether the asset’s post-Trump-victory honeymoon is over.
Bull Market’s End Side
Even before Donald Trump’s decisive victory, BTC’s price had already started to appreciate after the US Federal Reserve pivoted from its previous monetary strategy and started lowering the interest rates. In fact, the first cut was the deepest, as they say, when the central bank reduced the rates by 50 basis points.
Riskier assets such as bitcoin reacted with immediate price increases. However, the Fed’s policy seems to have a bigger impact on the asset’s price movements than many anticipated.
After all, the expected 25 basis point reduction from Wednesday didn’t lead to another price increase. Just the opposite, the central bank’s warning about another potential reversal in its strategy resulted in a bloodbath for BTC and the entire crypto market.
Consequently, those who argue that the bull market might have ended received some validation. In case the Fed indeed stops cutting the rates, BTC’s bull market might come to a screeching halt. Powell’s actions have already changed US investors’ behavior toward the cryptocurrency, as the spot Bitcoin ETFs recorded their worst day in terms of net outflows since their inception nearly a year ago.
Some analysts believe the $94,000 support zone is crucial for bitcoin, which is close to being tested now. If lost, the asset could plummet to $90,000 and even $80,000.
Just a Correction Side
Captain Faibrik also outlined the $94,000 support line as crucial during this correction. They told their 100,000 followers on X that such a price drop to that line would be a “healthy reset” and it could propel the asset in the opposite direction and continue its months-long rally.
$BTC #Bitcoin Correction is almost Done..!! https://t.co/GXWt21b5o6 pic.twitter.com/4d9QPO3kuk
— Captain Faibik (@CryptoFaibik) December 20, 2024
Crypto_Rover was also on the ‘just a correction’ side, claiming that this is the ‘final bear trap’ and investors should not be shaken out.
If you survived the #Bitcoin bear market…
Don’t let this final bear trap shake you out this bull market.
Don’t give up now.
The next 3 months can truly change your life.
— Crypto Rover (@rovercrc) December 20, 2024
In any case, it seems as if the $94,000 support will indeed be vital for BTC’s upcoming price movements. It was tested on a couple of occasions last week and bitcoin is close to doing it again. Recall that the cryptocurrency bounced off after the second such test on December 10 and marked a new all-time high just a week later.
Read the full article here
