(Kitco News) – Cryptocurrency prices experienced a sell-off overnight as the correction analysts had been warning about deepened, though interestingly, the drawdown is seen as a positive sign for the health of the bull market and sets things up for the rally to extend well into 2025.
#Bitcoin comes down.
Completely normal, the markets have just been rallying by more than $25K in a few weeks.
Resetting and consolidating, I'd favour that.
Two areas of interest. pic.twitter.com/e0qltlSErf— Michaël van de Poppe (@CryptoMichNL) November 26, 2024
“The cryptocurrency market is under pressure, losing about 4.6% in 24 hours to $3.2 trillion by the start of active trading in Europe,” noted Alex Kuptsikevich, chief market analyst at FxPro. “These are five-day lows, with the crypto market driven by a sell-off in safe havens such as Bitcoin (BTC) and gold in hopes of deescalating tensions between Lebanon and Israel.”
“The Cryptocurrency Fear and Greed Index fell to 79,” he added. “That is still extreme greed, but the index's lowest level in two weeks.”
“Bitcoin fell below $93K on Tuesday morning, deepening its corrective pullback and falling for the fourth consecutive day,” Kuptsikevich said. “On Monday, there was a renewed attempt to take the price above $99K, which turned into more selling. This is due to the geopolitical pullback, which has turned into a broader profit-taking scenario, looking at the entire rally since November 4th.”
“This means that traders should pay more attention to BTC's momentum around $91.8K (76.4% of the rally),” he noted. “Without proper support in this area, the bears' next target could be the $87K area (61.8%).”
Data provided by TradingView shows that Bitcoin hit a low of $91,425 in the early hours of Tuesday before bouncing back above $92,000. This region previously acted as resistance, and it remains to be seen if bears can flip it back to their favor or if it will serve as a base of support for bulls to resume their climb higher.
BTC/USD Chart by TradingView
“After the recent rapid rise, the market may be correcting, and investors' profit-taking behavior may also be one of the reasons for the price drop,” said Ryan Lee, Chief Analyst at Bitget Research. “In addition, long leveraged positions above $3.40 billion face liquidation risks, which may further exacerbate price volatility.”
“Regarding whether this decline is a ‘bear trap’ – a short-term price drop that induces bearish investors to enter the market, and then the price rebounds rapidly – this decline is mainly due to the profit-taking behavior of major US institutions in the face of the upcoming holiday,” he added. “In addition, the market has not broken through the 100,000-dollar integer psychological barrier after digesting the 5.40-billion-dollar purchase volume of MicroStrategy, which will also become a short-term rest and adjustment signal for the market. However, such an adjustment does not affect the overall bull market of Bitcoin, so such a decline will become a bear trap.”
Maksym Sakharov, co-founder and board member of Wefi, also sees the pullback as a sign of profit-taking by institutional investors ahead of the Thanksgiving holiday in the U.S. and expects Bitcoin to climb higher as the inauguration of Donald Trump approaches.
“Thus far, in this bull cycle, Bitcoin price has thrilled many investors as it looks to breach the $100,000 price mark,” Sakharov said in a note to Kitco Crypto. “While some positive factors have helped push the coin to this all-time high, the future growth pace hinges on key geopolitical changes. Institutional investors are among the most important investors who can influence the coin's price. These investors rely on strong political stability and positive policies before betting on any industry.”
“With Donald Trump set to lead for the next four years, the prospect that Bitcoin will gain a massive adoption from whales remains very high,” he added. “The president-elect has already revealed the names of his nominees for key positions, and the pro-Bitcoin and crypto agenda is well-spelled out. With this shift, there is a strong expectation that regulatory momentum will shift starting in January, creating room for more conservative institutional investors to get in the game.”
“While the crypto market has tread uncharted territory since Satoshi Nakamoto introduced Bitcoin, with Donald Trump, the actual regulatory framework tailored to the new assets might emerge,” Sakharov highlighted. “Already, the US market boasts spot Bitcoin and Ethereum ETF products. As regulations or executive orders are issued to protect the crypto market, the ETF channel might become investors' go-to offering.”
He attributed Bitcoin’s rise above $99,000 to the influence of institutional capital inflows and said, “If this inflow trend continues, the price of the coin might hit the $100,000 benchmark before the end of this year.”
“Technical charts suggest that Bitcoin's price is largely overvalued, suggesting a cyclical top might be near. Despite this logical caution, there is still an imbalance in total BTC mined, the current hype, and the demand from corporate buyers and ETF investors,” he concluded. “These factors might help sustain the overall Bitcoin price resilience as the broader market awaits the official inauguration of Donald Trump.”
At the time of writing, Bitcoin trades at $93,260, a decrease of 2.61% on the 24-hour chart.
