Bitcoin, the pioneering cryptocurrency, dropped by as much as 5.3% on Monday, hitting $89,329—its lowest level since November 18. This is a significant decline from the peak of $108,316 it reached in December. The broader crypto market also faced steep losses, with Ether and Solana experiencing drops of up to 10%.
The selloff was largely fueled by stronger-than-expected U.S. jobs data released on Friday. This data led traders to scale back expectations of imminent interest rate cuts by the Federal Reserve, adding pressure to an already volatile start to 2025. Alex Kuptsikevich, chief market analyst at FxPro, remarked, “The start of the new year has not been easy for the crypto market. Adding to the unease is the fact that last week’s upside momentum failed to develop, only attracting sellers.”
Even amid the downturn, MicroStrategy—a software company that has rebranded itself as a major Bitcoin holder—continued its Bitcoin buying streak for the tenth consecutive week. Despite this commitment, the company’s shares dropped by 3.2%, reflecting the broader negative sentiment surrounding cryptocurrencies.
Technical analysts are closely watching Bitcoin’s price movements. Piotr Matys, a senior FX analyst at InTouch Capital Markets, noted the formation of a “head and shoulders” chart pattern for Bitcoin, a classic indicator of a potential trend reversal from bullish to bearish. According to Matys, “Since $91,600 was viewed as a major support level, the token’s breach below that point now points to a strong technical bearish signal for Bitcoin.”
Looking ahead, analysts are speculating on Bitcoin’s next potential lows. Kuptsikevich suggested that the cryptocurrency might find its next support around $88,000. However, if bearish sentiment persists, a further drop to approximately $74,000 could be on the horizon. Such projections highlight the challenges facing Bitcoin as it navigates the current market environment.
Bitcoin’s record highs last year were bolstered by the launch of U.S. exchange-traded funds tied directly to the cryptocurrency and President-elect Donald Trump’s vocal support for the digital assets industry. However, the optimism that drove the market in 2024 has significantly waned as traders seek clarity on the regulatory landscape following Trump’s January 20 inauguration. The uncertainty has contributed to the cautious sentiment prevailing in the market.
As Bitcoin and other cryptoassets grapple with these headwinds, the broader implications for the market remain uncertain. The coming weeks will be pivotal in determining whether Bitcoin can regain its footing or if further declines lie ahead. The evolving macroeconomic environment and regulatory developments will undoubtedly play critical roles in shaping the cryptocurrency’s trajectory in 2025.