Bitcoin price extended its retreat on Wednesday, and was down by 1.8 percent at the time of writing to stay on course to registering the first successive two-day drop in 2025. The coin was rejected at the $102,000 mark on Monday and Tuesday, after retesting the six-figure level for the first time in three weeks.
BTC price momentarily broke below the psychological $95,000 support, signaling a weak upside potential. The broader crypto market capitalisation dropped by over $300 billion in response to Bitcoin’s slump, triggered by concerns over the Federal Reserve’s interest rate policy in 2025.
The Fed has indicated that it will be slow to cut interest rates in 2025, which has led to a cautious approach towards high-risk assets like cryptocurrencies. Therefore Bitcoin price could stay subdued in the near-term as investors absorb implications of the Fed’s policy.
Nonetheless, the coin could rebound if there is a significant change in the fundamentals surrounding the US dollar and Fed interest rate decision-making. Examples include geopolitical factors and pronouncements by Donald Trump’s incoming team.
Inclination to Bitcoin price downside is also supported by a decline in the open interest. According to Coinanalyze data, the value of BTC open interest perpetual contracts fell by 3.48% in the 24 hours preceding this writing. Similarly, futures contracts were down by 1.97%.
Elsewhere, Bitcoin’s ETF inflows declined from $973 million to $52.4 million in the last 48 hours, as reported by Coinglass. These figures signal a fading investor confidence in the crypto coin. A continuation of the trend could drive BTC price lower.
The momentum on Bitcoin price points to control by the sellers below the pivot mark at $95,940. That could see the coin move lower to the first support at $94,700. However, a stronger downward momentum could extend the decline and test the second support at $93,370.
Conversely, moving above $95,940 will shift the momentum to the upside. With the buyers in control, Bitcoin price could encounter the first resistance at $96,700. Clearing that barrier will invalidate the downside narrative and could drive BTC higher to test $98,510.
This post was last modified on Jan 08, 2025, 13:38 GMT 13:38