Bitcoin Drops to $92,500, Federal Reserve Policies in action?

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Hello Readers,

I hope all of you are spending an awesome day with your loved ones and enjoying the good vibe in your own Digital crypto world because of the ongoing Bull season. Since around the last 2 months, Bitcoin’s price has been acting like a wild rollercoaster ride, and around 2 days ago on January 7, 2025, it was also no exception. After briefly hitting the monumental $100,000 mark around 19th December in the last year, a new all-time high milestone of around $107,000 has been touched by $BTC, but it had not touched that same point since December 19.

If we look at the Bitcoins c'srrent price, we can admit to a high price correction at least, as Bitcoin’s value slipped back to $93,500 currently. This sharp drop may leave many crypto investors to wonder as no one expected a sudden and massive correction. So at this point, it is hard to tell whether Bitcoin will quickly recover from this position, or if it is the start of a downtrend. So, in this post let us take a dive and try to find what is waiting next for the cryptocurrency market. So if you are interested, let's jump in without any further ado.

Let us first try to break down what is happening around Bitcoin and why it matters for the global crypto market in the near future.

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What Caused Bitcoin’s Price Drop?

As per news and analysts, There are two key reasons for Bitcoin’s dip…

Federal Reserve Policies

Because of its overwhelming market cap and dominance in the crypto industry, Bitcoin has always been the first mover whenever there’s a pump season in the sector. So the force was uplifting BTC and it also made a new ATH by crossing the $100k mark. But as some time passes, we seem to have started gaining more negative interests towards this industry than there there good ones. I just shared a blog recently on the topic of Microstrategy buying another 1070 Bitcoin, but today another big but bad news crossed my eyes while surfing the internet. First of all, a reason behind this downtrend is indicates towards The U.S. Federal Reserve’s tightening monetary policy, which is creating negative sentiment spreading across the global financial markets. As the Fed shows a green flag and hopefully slows down rate cuts due to strong economic data, then crypto-related investments like Bitcoin or other major tokens are going to become less attractive.

On the other hand, The Federal Open Market Committee’s (FOMC) latest official updates revealed uncertainty about future rate cuts as well, thus adding further tension in the market which is already frightening financially.

Market Liquidation

Another piece of big event that may be affecting Bitcoin hard, is the fact that over $631 million worth of leveraged long positions on active trades were liquidated within the last 24 hours, according to data taken from CoinGlass. Now especially if you have engaged yourself in future or leveraged trading, then you must know that when their prices fall, active leveraged positions are forced to sell or get liquidated after a certain point, which drives prices even lower in the short run as an after-effect. So in order to get rid of it, what Analysts Are Saying is totally divided into two different parts. Experts have overall mixed views on how these recent events will affect Bitcoin’s future.

The well-known Ryan Lee from Bitget Research has suggested that current U.S. economic strength and even more strengthening of their monetary policies are making crypto coins less appealing in the short term of time. On the other way, John Glover, Ledn’s CIO has predicted that Bitcoin might test the $90,000 level at first, before taking an uptrend back to a Bull phase strongly. He is, however, strong-minded about crypto and is also optimistic about bitcoin’s potential to go for a sharp uptrend to $126,000 - $128,000 in the near future. Bitcoin’s loss of support at $101,165 is also very significant to keep a watch on, and the scenario has now returned to a trading range of $91,000 to $101,165. So I think holding above $91,000 is crucial to prevent further losses for traders.

What’s Next for Bitcoin?

We live in a volatile but fruitful Crypto realm and here, while these types of sharp short-term corrections might feel unsettling and scary, the long-term growth for Bitcoin will forever remain strong.

Potential Long-Term Growth

Analysts have forecasted that Bitcoin could reach its season cycle top above $150,000 by late 2025. This growth is as you may not expect, related to a much predicted $20 trillion increase in the global circulated money supply, Out of which, at least $2 trillion could end up in Bitcoin investments.

Large economic factors

Now looking at reasons related to large economic factors, as the Federal Reserve’s decisions are about to unfold in the future, their impact on the cryptocurrency market sentiment will be very critical. However, I guess all the big investors are keeping a close eye on these developments to get updated and predict Bitcoin’s trajectory more accurately.

Think Long-Term

If you have spent at least a few seasons in this realm, then you know that Bitcoin’s price fluctuations are nothing new and in fact, more predicted. The cryptocurrency market has been highly volatile since its existence, and sharp corrections are a natural part of its seasonal cycles. So those of us who are in the long run will gain the most in this race, so we should focus on long-term investment. These types of volatile sharp falls often open opportunities for buying or selling for leveraged traders or if decent amount of investment. However, it is important to always stay informed and cautious especially if you are trading these days with the Federal Reserve’s policy updates.

As Bitcoin consolidates around the $90,000–$100,000 range, the focus remains on key support levels and macroeconomic trends. Whether the market will fall further or stage a strong rally depends largely on these factors. Anyway, Bitcoin’s journey to $92,500 might seem like the start of a downturn to many, but it is just a part of a larger story. For those watching closely, it is a reminder of the crypto market’s thorns and potential. So even if you are holding Bitcoin for a short time, holding it after taking a more confirmed commitment. Nothing I say in this post is financial advice. Please dyor before investing in crypto.

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Information Source

• https://coinmarketcap.com/currencies/bitcoin/

• https://en.wikipedia.org/wiki/Bitcoin

• https://finance.yahoo.com/news/bitcoin-drops-92-500-federal-055147431.html

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I hope you liked reading my post regarding the topic of Bitcoin’s sharp correction and Federal Reserve Policies in action. Let me know your thoughts regarding this topic in the comment section below and I will be seeing you all in my next post.

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