Key Reasons for Bitcoin Price Decline?
After reaching a record high of $108,000, Bitcoin's price has fallen sharply, with investors questioning the reason for this sudden drop. While the earlier rally brought cheer to the market, several factors are now contributing to the downward trend. Meanwhile, if Bitcoin fails to break above the resistance level, it could fall further towards $95,000.
The Fed's interest rate decision
One of the main reasons for Bitcoin's fall is the interest rate decision by the US Federal Reserve. However, Coinpedia News reports that there is a 96% chance the Fed will cut by 25 basis points, but there are concerns about how to handle inflation going forward.
With inflation rising to 2.8% in November, Fed Chairman Jerome Powell's comments on the 2025 rate outlook are under scrutiny. If the Fed cuts rates lower than expected in 2025, it could put more pressure on the market.
Traders make money from their profits
Another key factor is the wave of short-term bitcoin holders selling. Many traders who recently bought Bitcoin are now selling to protect their profits after the big rally. Such sales are common after the price reaches a new high.
However, long-term holders who bought Bitcoin when it was trading between $90,000 and $100,000 will remain largely inactive, perhaps waiting for more stable conditions before making any moves.
History shows that corrections are common.
Bitcoin's past price cycles show that corrections are a normal part of its growth. At previous all-time highs, Bitcoin has often seen supports of up to 34%. These short-term drops can wipe out weeks of gains but are considered a natural part of market behavior.
Analysts believe that this correction may temporarily take Bitcoin below $100,000 before stabilizing again.
Bitcoin to drop 95 thousand dollars
As of now, Bitcoin is trading around $104k, a 2.93% drop in the last 24 hours. However, for Bitcoin to continue its upward momentum, it must turn this new price peak into a strong support level. If successful, it could push the price past the much-anticipated $110,000 mark.
However, if Bitcoin fails to break and hold above this resistance, the price may decline and Bitcoin may retreat to the next key support level at $95,651.
