Bitcoin Faces Potential Drop to $88,000 Amid Market Uncertainty
Bitcoin’s price took a hit, dropping 6% to fall below $96,000 as concerns over macroeconomic factors triggered a spot sell-off in the cryptocurrency market. This decline has put BTC at a crucial juncture, with analyst Skew warning that failure to hold support at $95,000 could lead to a further drop to $88,000.
Skew highlighted that there has been a notable increase in demand near the $88,000 level, as evidenced by liquidity blocks on the Binance order book. This suggests strong buyer interest at that price point, which could act as a buffer against further downside pressure.
While some traders, like Johnny, anticipate a potential dip in the coming weeks, pseudonymous analyst Rekt Capital noted that Bitcoin is currently trading within a range of $91,000 to $101,165 after failing to hold the critical support at $101,165. The $91,000 level is now seen as the next key support level to watch.
Amid these bearish predictions, institutional demand for Bitcoin appears to be waning, with a significant drop in inflows recorded on Jan. 7. However, on-chain data paints a different picture, with net flows from exchanges showing an increase in withdrawals as investors move their holdings to personal wallets for longer-term holding.
On-Chain Data Supports Bullish Case for Bitcoin
According to IntoTheBlock data, the surge in withdrawals from exchanges indicates a shift towards a more long-term holding strategy among investors. This trend could alleviate sell-off pressure and support Bitcoin’s price in the long run.
Additionally, the Chaikin Money Flow index on the 1-day BTC/USDT chart remains positive, signaling sustained buying pressure and healthy capital inflows into Bitcoin. This could pave the way for a potential upward move in the near future.
CryptoQuant CEO Ki Young Ju also remains optimistic about Bitcoin’s prospects, noting that the Apparent Demand indicator for Bitcoin remains high. This indicator measures investors’ confidence in the asset’s future potential by comparing newly mined coins with those held for over a year.
Overall, while short-term price volatility may persist, the underlying fundamentals and on-chain data suggest that Bitcoin could weather the storm and potentially see a rebound in the near future.