3 potential factors that could potentially reverse the plummeting prices of Bitcoin and altcoins
Bitcoin price dropped to $90,000 on January 13th as the cryptocurrency market continued to weaken. Bitcoin (BTC) fell by 16% from its peak in December and is now near its lowest point since November 19th. Other altcoins such as Solana (SOL) and Cardano (ADA) also continued to fall.
The current crypto crash is largely attributed to the anticipation that the Federal Reserve will take a more hawkish stance this year. This anticipation has grown following the release of strong nonfarm payroll data by the US on Friday.
The data showed that the unemployment rate decreased to 4.1% in December as the economy added over 256,000 jobs. These figures led to a decline in stock prices and an increase in government bond yields.
The first potential catalyst for a Bitcoin recovery is the upcoming release of US consumer inflation data on Wednesday. Economists expect the data to show that inflation increased from 2.7% in November to 2.9% in December. Core inflation, which excludes volatile food and energy prices, is expected to remain at 3.3%.
Bitcoin and other altcoins may rebound if the inflation numbers come in lower than expected. For example, if the headline and core Consumer Price Index drop to 2.5% and 3.0% respectively, it could trigger a recovery in crypto prices.
Another important factor to watch is the upcoming inauguration of Donald Trump, which could have an impact on the crypto market. Trump campaigned on making the US the global crypto capital and has already taken steps towards that goal. He appointed Paul Atkins as the next Securities and Exchange Commission chief and started forming a crypto panel of experts.
Therefore, his upcoming inauguration and Gary Gensler’s resignation may generate excitement in the crypto industry. All of this is happening as companies like MicroStrategy and Semler Scientific continue to buy Bitcoin.
Bitcoin price technicals
Another potential catalyst for Bitcoin’s price is its technical setup. BTC is currently holding at a key support level of $90,100, a level it has not fallen below since December. This suggests that bears are hesitant to take short positions below this level.
Additionally, the accumulation and distribution indicator has been rising, indicating ongoing accumulation.
While the $90,100 support level forms the neckline of a bearish head-and-shoulders pattern, Bitcoin is likely to bounce back this week. Historical data also shows that Bitcoin tends to recover after a Monday drop.
