The fall of Bitcoin is concerning, but not too much in the long term

The caduta di Bitcoin yesterday came suddenly, even though a correction was in the air. 

What few expected was such a strong drop, given that the price of BTC compared to seven days ago has lost more than 7%. 

In reality, in the past, there have been many crashes much stronger and quicker than yesterday’s, perhaps also because the fall of Bitcoin stopped at a certain point.

The fall of the Bitcoin price

The drop technically began on Monday, when the price of Bitcoin (BTC) fell in a few hours from $96,000 to less than $94,000.

To tell the truth, in the past months, similar movements had already been made several times, and this is why at first glance it does not seem worrisome. 

The problem is that it did not stop there. 

In fact, during the following night, it also fell below $91,000, and at that point, it was clear that it was a true drop, and not just a simple fluctuation due to volatility. 

Indeed, subsequently, the decline continued, reaching a daily low peak below $86,000. This is the lowest point reached by the price of Bitcoin after the Trump trade that had allowed it to rise above $100,000 for the first time in history.

At that point, however, the fall seems to have ended. 

The support stops the fall of Bitcoin

The fact is that there seems to be a support positioned around $89,000, or slightly below. 

Yesterday, within a few hours, after a couple of brief crashes due to the forced liquidations of leveraged long positions, there was a rebound, and not by chance, the price of BTC thanks to that rebound rose just above the 89,000$ mark.

Now it has been twelve consecutive hours that it oscillates right around or just below that threshold. 

It is not a random threshold. 

Prefacing that the Trump trade started more or less from the 69,000$ mark, and it led the price of BTC to record its all-time high above the 109,000$ mark, 89,000$ is exactly halfway between these two values.

The level of $70,000 at this moment can be considered the reference point, also because during the last year Bitcoin often remained more or less in that vicinity. 

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Even $110,000 can be considered a reference level, but a maximum. In fact, from the beginning, it seemed that once the bullrun triggered by the electoral victory of Trump started, that could be the destination of such a bull run, and the fact that this level has not been surpassed could also be the reason for the end of the bullrun itself.

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Therefore, the current approximately $89,000 is not only the exact midpoint between $69,000 and $109,000, but it also risks being the dividing line between the end of the current bull-market and its potential recovery. 

The forecasts on the price of Bitcoin

Unfortunately, several forecasts circulating seem to indicate that the first hypothesis is more likely, namely that the bull-market that started in November may have ended. 

But this still does not mean that it cannot pick up again in a while. 

For example, the Global Economist of Kraken, Thomas Perfumo, says: 

“The drop of Bitcoin below $90,000 has raised doubts about whether the cycle has reached its peak, but the data tells a different story. Historically, the peaks of major cycles coincide with a drop in Bitcoin dominance towards 40%, when investors move en masse to altcoins. Currently, the dominance remains strong around 60%, indicating that the market momentum has not yet reached a speculative peak.

At the same time, the market capitalization of stablecoins has grown by 11% since the beginning of the year, indicating a continuous deployment of capital on-chain. These structural indicators suggest that the crypto market as a whole still has room for growth.”

Probably, it is primarily a matter of timing. 

It should be remembered that something similar happened both in 2017 and in 2021, that is, during the last two major bull markets. In both cases, in fact, at a certain point there was a strong correction that lasted months. However, the bull market then recovered, although not quickly. 

The bear-market

In the current state, however, there are no signs of a possible start of a bear-market in the short term.

However, this is true only if one analyzes the price trend of Bitcoin, because the situation is much worse for altcoins. 

However, it should be remembered that the crypto markets are still largely dominated by BTC alone, so if this were to recover, the crypto markets as a whole should also recover.

Therefore, on one hand, by observing the price trends of altcoins, one might absolutely doubt that we have entered a bear-market, while on the other hand, by observing Bitcoin, such doubt does not arise, and this matters much more than the fact that the altcoin market is in strong distress. 

It should be noted, however, that the current situation is also and above all a result of the weakness of traditional financial markets, which are very concerned that Trump’s trade war with tariffs could broadly and deeply damage the entire global economy.