Bitcoin Price Drops Below $98K Amid Economic Volatility, Traders Eye 2025 for Bullish Upsurge

bitcoin has once again demonstrated its volatility as it recently declined, falling below the $97,500 mark from a peak of approximately $102,712. Analysts attribute this downturn to a confluence of market factors that influence trader sentiment and expectations. Eyes are set on potential bullish trends for early 2025, particularly with the upcoming administration of Donald Trump promising a more cryptocurrency-friendly regulatory environment. However, the prevailing atmosphere is heavy with concerns regarding liquidity and greater market volatility, fueled by newly released jobs reports and anticipation of the Federal Open Market Committee’s (FOMC) minutes.

In a notable economic report, the Job Openings and Labor Turnover Survey (JOLTS) indicated an increase of 259,000 positions, bringing the total job openings to around 8.1 million for November 2024. This steady job growth signals a robust labor market, leaving analysts questioning the likelihood of significant Federal Reserve interest rate cuts in the near future. In fact, the JOLTS data has reflected gains in various sectors, including professional services, finance, and education, emphasizing the ongoing strength within the U.S. job market.

Furthermore, the ISM Services Purchasing Managers’ Index (PMI) reflects continued resilience in the economy, suggesting that the U.S. may be on stable ground as Trump approaches his inauguration on January 20. Despite these positive indicators, U.S. stock markets experienced a downturn, halting a two-day rally. This decline was largely attributed to the latest economic data sparking concerns about the Federal Reserve maintaining its interest rates amidst persistent inflationary pressures.

This backdrop has propelled the U.S. dollar index (DXY) to a rebound above 108.5, following a two-day dip that had previously buoyed Bitcoin prices. In parallel, the 10-year Treasury yield has climbed to a significant high of around 4.68%, marking its strongest position in roughly 35 weeks.

In the last 24 hours alone, Bitcoin’s price has witnessed a drop of approximately 5%, currently trading around $97,566, with fluctuations reaching from a low of $97,153 to the earlier high of $102,712. Interestingly, the trading volume surged by nearly 27%, hinting at a waning interest among traders.

Despite the recent drops, Bitcoin’s price had shown substantial weekly growth, soaring over 10%. Many expect that underpinned by a series of favorable macroeconomic developments and renewed technical signals, Bitcoin might indeed break past its previous all-time highs. This optimism seems bolstered by inflows directed towards spot Bitcoin exchange-traded funds (ETFs), which signal a reopening of institutional interest in the leading cryptocurrency.

Data from K33 Research points to a significant resurgence in Bitcoin ETF flows, marking the strongest activity in over two months. Additionally, open interests in Bitcoin have seen steady gains, showcasing a trend of positive returns across the past week.

As Bitcoin oscillates around the $100,000 threshold, the Coinbase Premium Index, a gauge used by many to judge market sentiment, indicates a return to positive territory. This could suggest favorable conditions for traders aiming to capitalize on the turbulent market.

With Donald Trump’s inauguration approaching, market watchers remain cautiously optimistic. Trump’s anticipated policies could provide essential regulatory clarity, fostering an environment conducive to cryptocurrency growth. His strategy focusing on integrating Bitcoin into national reserves has gained traction internationally, hinting at a future where cryptocurrencies play a more significant role.

However, not all voices in the cryptocurrency community share this bullish perspective. Notably, Arthur Hayes, co-founder of BitMEX, foresees a potential downturn in the crypto market around March, driven mainly by declining U.S. dollar liquidity. His caution stems from concerns that while mechanisms such as the Reverse Repo Facility (RRP) and Treasury General Account (TGA) may support short-term gains, this momentum may not be sustainable past early spring.

Overall, the current market turbulence reflects a complex interplay of economic indicators, changing leadership, and evolving investor psychology that will continue to shape Bitcoin’s trajectory in the near term. As investors remain vigilant, the cryptocurrency landscape may witness further shifts as definitive regulatory frameworks arise and macroeconomic conditions evolve.