Bitcoin suffers correction just shy of 100,000

Bitcoin price surged last week, reaching $99,500 on Friday for the first time in history and flirting with the $100,000 milestone. Bitcoin’s rally was halted over the weekend, however, and Bitcoin price dropped below $94,000 on Monday. If the BTC price declines, support can be found at $85,000, while resistance may be encountered at the psychological level of $90,000. 

Ethereum price, on the other hand, gained strength on Monday on improved risk sentiment, rising from $3,350 to $3,520. If Ethereum's price declines, it may encounter support near $3,000, while if it increases, resistance may be encountered near $3,600.

Bitcoin has been riding the Trump trade in the past couple of weeks, surging to all-time highs. Bitcoin has more than doubled its value this year, gaining over 130% year-to-date and is flirting with the $100,000 milestone. Bitcoin is attracting investors’ attention, at both institutional and retail levels. Institutional demand for Bitcoin continues to rise, with companies such as MicroStrategy investing large sums in the cryptocurrency. In addition, inflows of the spot Bitcoin exchange-traded funds (ETFs) have been record-breaking in the past couple of weeks, fuelling demand for the cryptocurrency.   

Bitcoin price slumped on Monday, however, slipping by approximately 2.0%. Bitcoin was just shy of reaching the $100,000 milestone last week and many traders rushed to realize their gains after Bitcoin’s rally was halted over the weekend. Most market analysts, however, predict that Bitcoin will resume its upward momentum and will breach the $100,000 barrier in a few days, especially if a risk-on sentiment continues to prevail in markets.

Crypto markets have been gaining strength since Donald Trump’s victory in the US Presidential elections. Trump’s proposed tariffs and tax policies are expected to support economic growth, boosting high-risk assets, such as cryptocurrencies. In addition, Trump has openly declared his support of crypto markets, announcing that he will make the US ‘the crypto capital of the planet’. Growing expectations that the new government will adopt a pro-crypto regulatory and fiscal policy have been boosting crypto markets, especially since Donald Trump announced plans to accumulate a national Bitcoin stockpile.

Geopolitical concerns are promoting a risk aversion sentiment, lowering the appeal of high-risk assets such as cryptocurrencies. Risk sentiment dropped last week, as tensions between Russia and Ukraine flared. Tensions between Russia and Ukraine cooled over the weekend, however, boosting crypto markets. 

The conflict between Israel and Hamas is also putting pressure on risk assets. The conflict in the Middle East, however, has been raging for over a year and markets are starting to ignore this risk. In addition, reports that Israel and Lebanon have agreed to the terms of a peace deal that will end the Israel-Hezbollah conflict propped up risk assets on Monday.

Cryptocurrency prices are also affected by central banks’ interest rates. High interest rates are restricting economic growth, putting pressure on risk assets, while the promise of rate cuts boosts crypto markets. Rate cut expectations have been fluctuating in the past couple of weeks, with odds of a December rate cut hovering near 55%.

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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