Bitcoin risks not holding the 100k?

Yesterday the price of Bitcoin fell for the first time below 100k since December 13

In other words, after less than a week since the last time, it has fallen below this very important psychological threshold again

Bitcoin and the fateful level of 100k

The 100,000$ mark regarding the price of Bitcoin has been a special focus since 2021

At that time in particular, there were the projections of PlanB, based on the stock-to-flow (S2F) model, according to which the price of BTC in the second part of the year could have significantly exceeded that figure.

To tell the truth, PlanB claimed that his were real forecasts, while in reality they were only projections based on past trends. Projections based on the past are valid only as long as the situation does not change

In 2021, there was a strong change, around May (shortly before mid-year)

That change was due to a total and definitive ban by China on Bitcoin trading. There had already been other Chinese bans on crypto in the past, but none had ever managed to completely halt the Chinese crypto market.

However, in the second half of 2021, the Chinese crypto market practically disappeared, causing a significant loss of capital in the global crypto market.

Thus, PlanB’s projections suddenly became incorrect, but not because they were wrong: the only problem was that the general market conditions had changed

In light of this, it is possible to hypothesize that, perhaps, if the Chinese capital had not disappeared, the price of Bitcoin could have reached the fateful 100k already in the second half of 2021

The current situation

The fact is that, over the following years, although the Chinese ban remained in place, the Chinese managed to re-enter the crypto market all the same, using foreign channels

And so today Chinese capital has largely returned, despite the ban still being in effect

To this must be added that after the US presidential elections, the price of Bitcoin generally manages to return to the historical highs of the previous cycle, as already happened in 2016 and 2020

Therefore, it should not be surprising at all that the price of BTC this year has reached and surpassed the highs of 2021 even before the US presidential elections, nor that after them it even managed to reach 100k for the first time

In light of everything that has happened in the last four years, it is possible to say that the situation now seems to have returned to normal

Bitcoin (BTC): holding the 100k

Yesterday, however, the 100k did not hold

To tell the truth, after dropping to $98,000, the price of Bitcoin then quickly returned above $100,000, managing to also rise above $102,000.

The question now is: will it hold the 100k?

A good part of the answer lies in the behavior of the American markets

Yesterday, in fact, it was the American markets that brought Bitcoin back under 100k

The key point was the Fed’s change in perspective regarding the interest rate cut estimates for 2025. Until the day before yesterday, the markets were convinced that next year there would be at least 4 cuts, whereas yesterday the Fed clearly stated that it is more inclined to imagine only two, for now

The consequence was a strong and sudden repositioning of the American markets on this new perspective, which caused heavy losses that also affected the crypto markets.

Now, however, with a cool head, other hypotheses can also be made

The hypothesis of the rebound

The first hypothesis is that today the American markets, after yesterday’s course correction, may return to being relatively optimistic

In fact, the reason that prompted the Fed to revise its estimates on rate cuts is that the US economy is performing better than expected

Given the high rates, for many months now, a downturn in the US economy was expected, which instead is continuing to perform substantially well

While on one hand this means that the Fed will not be able to afford to lower rates too much or too quickly, in order to avoid a resurgence of inflation, on the other hand it means that by 2025, better than expected economic results from US companies could be anticipated

Therefore, from today onwards, there could be further repositionings, but perhaps this time upwards

The other hypothesis, however, is that the markets yesterday actually changed their mind about 2025, starting to hypothesize a less rosy situation than expected. However, in light of the words spoken yesterday by the Fed chairman, Jerome Powell, which were in effect the trigger for the decline, the prospect of a weakening of the US economy in 2025 would actually seem to be remote

The future of Bitcoin

As for Bitcoin, in theory, there are still hopes that its price could rise further, perhaps even well beyond 100k

In this regard, there are two relatively predictable dynamics that can help to understand what might happen.

The first is the one that sees many profitable sales postponed to January in order to delay the payment of capital gains taxes by a year. This dynamic, which could also be behind the historical record of the day before yesterday, suggests that starting from the beginning of January, the growth trend could also momentarily reverse. It is, however, only a medium/short-term dynamic

The second is the one concerning the Dollar Index

The price of Bitcoin tends to be inversely correlated to the Dollar Index, and historically the Dollar Index tends to fall in the twelve months following the USA presidential elections

In 2016, for example, when Trump won for the first time, the Dollar Index started to fall only at the end of December, and just yesterday it marked the annual peak of 2024 well over 108 points. If this perspective comes true, it is possible that the price of BTC could rise again in the next twelve months