Bitcoin, the titan of the cryptocurrency world with a market capitalization of around $1.9 trillion, has experienced a significant decline, falling below the psychological threshold of $100,000. This sudden drop, which occurred in just three days, has left many investors and analysts wondering if this marks the end of the current bull market or indicates a healthy correction within an ongoing uptrend.
Temporary reversal or trend reversal?
The price action has been particularly notable this week, with Bitcoin breaking the $100,000 support level, which had held strong for eight consecutive days. Market analysts point out several factors that contribute to this decline. A significant influence is the market makers strategy, which involved driving the price upward to encourage traders to open long positions around $98,000, thereby increasing liquidity.
After depleting this liquidity, market makers strategically used Federal Reserve Chairman Jerome Powell’s speech as a catalyst to drive a downward price move, effectively filling the price inefficiencies at $93,744 (50%) and $90,513. (100%).
The analysts explained: “Bitcoin’s decline was necessary because there were inefficiencies below the price that needed to be covered, which are $93,744 for 50% and $90,513 for 100%. The inefficiency rule states that traders must cover 50% or 100% of the inefficiency.”
They added that market makers “deliberately increased the price to induce traders to open long positions, thereby increasing liquidity to $98,000.” “The exhausted market makers decided to remove liquidity from $98,800 and used Powell’s speech as a catalyst to drive the move lower.”
Experts are now predicting a rebound to $101,000 before a pullback or trend continuation, as the $93,788-$92,200 range currently acts as solid support. This area has seen significant buy orders, aligning with the recently covered 50% inefficiency. TO bounce From this level it seems inevitable.
BlackRock and institutional moves indicate confidence in Bitcoin
Amid the volatility, BlackRock, one of the world’s leading asset management companies, has made headlines for its significant investments in Bitcoin. According to Arkham Intelligence’s insights, BlackRock not only bought Bitcoin online while other ETFs were selling off, but also accumulated a considerable amount, and now owns 122.6 thousand BTC. This makes BlackRock the 11th largest holder of Bitcoin, controlling approximately 0.6% of the circulating supply.
Its aggressive accumulation, including a recent $1.5 billion purchase, stands in stark contrast to the broader market’s net selling of $785 million in BTC this week. BlackRock’s actions have sparked debates on platforms like X, with many applauding or humorously pointing out its transition from traditional assets to digital currencies.
Additionally, BlackRock’s involvement in the cryptocurrency market was underlined by the fact that its BUIDL fund received $100 million, indicating a strategic turn towards digital assets. Such a heavyweight in finance could interpret this move as a vote of confidence in the long-term viability of cryptocurrencies, which could influence market sentiment and dynamics.
Market Sentiment: Fear or Opportunity?
Current market sentiment, as measured by the Fear and Greed Index, remains in the “greed” zone at 62, indicating minimal fear among investors. Instead, many see the drop below $100,000 as a buying opportunity, with expectations of an imminent recovery. Analysts predict a rebound to around $101,000 before any significant pullback or continuation of the current trend, supported by solid buying in the $93,788-$92,200 range, which aligns with the recently reached 50% inefficiency level.
Featured image from iStock, chart from Tradingview.com
Fountain: NewsBTC.com
