Bitcoin price drop caused by profit-taking and macroeconomic conditions
- Bitcoin dropped to $89,900 on January 13, its lowest decline in two months
- James Toledano, COO at Unity Wallet, said one of the reasons for the drop is profit-taking after Bitcoin hit $108,000 in mid-December
- The inauguration of President-elect Donald Trump could spark renewed buying interest, Toledano said
Bitcoin fell below $90,000 for the first time in two months, dropping 3.6% in 24 hours as the market experienced selling pressure.
Data from CoinMarketCap shows that Bitcoins price dropped to around $89,900 on January 13. However, at the time of publication, its trading over $95,000.
According to James Toledano, COO at Unity Wallet, there are several reasons why Bitcoins price fell.
The first is profit-taking, after hitting a peak of around $108,300 in mid-December, the market has seen a massive amount of it, particularly following the election of pro-crypto President-elect Donald Trump, he said to CoinJournal, adding:
Secondly, while institutional buying has continued contributing to Bitcoin reserves on exchanges hitting a seven-year low, trading volume remains subdued and this could simply be down to a seasonal slow-down.
Macroeconomics weigh on the market
Recent analysis suggests that bleak economic expectations drive this bearish sentiment. This includes Trumps tariff plans, the US Federal Reserves cautious approach to interest rate cuts, and a strong dollar.
Zach Pandl, head of research at Grayscale Investments, said to CNBC that:
I would attribute the drawdown in the last two days largely to the market starting to appreciate that not every aspect of the Trump policy agenda is going to be positive for Bitcoin and tariffs do introduce some new uncertainty.
As questions surround Trumps forthcoming policies, it may have dampened enthusiasm, which can lead to short-term volatility for an already highly volatile asset, said Toledano.
Some analysts believe Bitcoin can reach between $140,000 and $200,000 by mid-2025, so the current price action may appear concerning. Yet, it doesnt necessarily signal the end of the bull run.
The inauguration of President-elect Trump is just seven days away and could be a pivotal moment, with markets anticipating announcements of pro-crypto policies that might spark renewed buying interest, said Toledano. Institutional accumulation, as reflected in falling exchange reserves also supports the view that demand remains strong despite low trading volumes.
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Text source: CoinJournal: Home
