Bitcoin has recently fallen below $95,000, experiencing a 7% correction after failing to surpass the psychological barrier of $100,000.
This decline has been fueled by investor caution ahead of crucial economic data and the release of the Federal Open Market Committee (FOMC) minutes, causing a wait-and-see sentiment in the market.
Key Data Driving Volatility
Upcoming economic data and the FOMC minutes, set to be released tomorrow, have heightened investor anxiety, leading many to temporarily exit risky positions like Bitcoin.
Source: Tradingeconomics
Below are eleven critical data points investors are watching closely:
- FOMC Minutes (27 November):
The minutes will provide insight into the Federal Reserve’s policy stance, particularly on future rate cuts. Any indication of continued hawkishness could increase volatility across markets, including crypto. - Core PCE Price Index (MoM, October):
This inflation measure rose 0.3%, aligning with expectations. This suggests inflationary pressures remain steady, potentially influencing the Fed’s rate decisions. - Durable Goods Orders (MoM, October):
Orders fell by 0.7%, significantly below the forecast of 0.5% growth. This decline signals weakening consumer and business demand for high-value goods. - GDP Growth Rate (QoQ, Q3):
The U.S. economy expanded by 3% in Q3, exceeding the forecast of 2.8%. While this reflects economic resilience, it may delay future rate cuts, keeping liquidity tight. - Personal Income (MoM, October):
Income rose by 0.3%, matching expectations. This steady growth supports consumer spending but also sustains inflationary risks. - Personal Spending (MoM, October):
Spending grew by 0.5%, beating the 0.3% forecast. This robust consumer activity may fuel further inflation, pressuring the Fed to maintain a cautious stance. - GDP Price Index (QoQ, Q3):
The price index rose by 2.5%, surpassing the expected 1.8% increase. This reflects persistent price pressures in the economy. - Goods Trade Balance (October):
The deficit widened to -$108.23 billion from the previous month’s -$99.9 billion, signalling a drop in export performance and rising economic imbalances. - Initial Jobless Claims (November 23):
Claims fell to 213,000, lower than the expected 217,000. A resilient labour market may lead the Fed to maintain higher rates for longer. - PCE Price Index (MoM, October):
The index increased by 0.2%, slightly below prior figures but still indicative of inflationary pressures. - PCE Price Index (YoY, October):
The year-on-year rate grew by 2.1%, in line with expectations, but highlights inflation’s persistence in the broader economy.
The combination of these data points has created a cautious market environment. Many investors are selling risky assets like Bitcoin to safeguard their portfolios ahead of potential volatility driven by these economic releases.
Despite short-term corrections, Bitcoin continues to attract robust institutional interest. CoinShares data reveals that Bitcoin spot ETFs experienced a record $3.13 billion inflow last week.
This historic figure underscores growing confidence in Bitcoin’s long-term value, with total inflows for the year now reaching $37 billion.
The U.S. led these inflows with $3.2 billion, while European markets like Germany and Sweden recorded minor outflows. Other regions, such as Canada, Australia, and Hong Kong, have maintained steady inflows, reinforcing the global interest in digital assets.
Bitcoin Price Analysis: Key Levels and Market Sentiment
Bitcoin’s failure to breach $100,000 underscores the significance of this psychological resistance. Ryan McMillin, Chief Investment Officer at Merkle Tree Capital, notes that this level has become a focal point for profit-taking, creating sell pressure as prices approach it.
The asset faced a sharp correction, dropping approximately 6% to below $93,000 after reaching a peak of $97,800 last week. This decline triggered the liquidation of $400 million in long positions within a single day, highlighting the high volatility in the market.
Despite the recent pullback, this correction is likely temporary. According to Ryan McMillin, the $92,000 level is seen as a critical support zone due to limited liquidity below this range, making it less likely for prices to drop significantly further.
Many predict that Bitcoin could retest the $100,000 price level soon, supported by positive sentiment from increasing institutional interest and accommodative monetary policies. The cycle of rate cuts and favourable regulatory developments is expected to act as key drivers for more stable price movements.
Source: Tradingview
From a technical standpoint, Bitcoin’s daily chart indicates that buying volume has started to decline, as reflected by a Relative Strength Index (RSI) that is moving out of the overbought territory.
Additionally, Bitcoin has exited its long-term appreciation zone on the daily chart, increasing the likelihood of further corrections in the short term.
However, analysts suggest that any further correction will likely be contained between the $90,000 and $92,000 levels, considered strong support zones. Importantly, this correction is unlikely to persist for an extended period.
On the monthly chart, Bitcoin still shows positive momentum, and there are no signs of an overbought condition in terms of volume or RSI, providing hope for a recovery.
While the $100,000 level remains a psychological barrier, Bitcoin’s ability to attract strong institutional demand and its resilience during corrections suggest that a break above this level could occur, albeit after some consolidation.
For now, traders should watch the $92,000 level closely as a critical point of support and anticipate potential volatility ahead of macroeconomic developments.
Conclusion
Bitcoin’s recent correction highlights the intricate balance between macroeconomic factors and market dynamics. While economic data releases and the FOMC minutes are driving short-term caution, institutional inflows and strong support at $90,000 provide reasons for optimism.
The psychological $100,000 mark remains a formidable challenge, requiring sustained momentum to overcome. Traders must remain vigilant, focusing on strategic risk management while navigating these uncertain and volatile conditions.
