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The euphoria of Bitcoin at $108,000 was short-lived. Since this All Time High in November 2024, BTC has struggled to stay above $100,000, leaving traders and analysts perplexed. The last few weeks have seen the crypto market wobble, notably due to speculations surrounding the decisions of the U.S. Federal Reserve. With the Fear & Greed index marking a historical drop, let’s dive into the behind-the-scenes of this turnaround.
The fall of Bitcoin : a domino effect of events
The news on Bitcoin: the Fear & Greed index, which measures the mood of the crypto market, experienced a spectacular plunge on January 9th, dropping from 69 to 50 in a single day. This descent into hell reflects a brutal transition from euphoria to a neutral sentiment.
For reference, the last time the score was this low was on October 14, 2024, when Bitcoin was trading at $63,000.
Several factors are behind this drop:
- BTC price under $92,000, influenced by rumors of the sale of 198,000 BTC seized on Silk Road;
- Rising U.S. bond yields and a strengthening dollar, creating an unfriendly environment for risky assets;
- Massive withdrawals from Bitcoin ETFs: $570 million in assets evaporated on January 8th.
https://twitter.com/PizzinoMichael/status/1877535922155303124
Michael Pizzino, an influential analyst, highlighted on Twitter:
“The last time the index was at 50, BTC soared from $49,000 in two months. This could mean a BTC at $140,000 in March!“
If history does not always repeat itself, it often rhymes… and this prediction is certainly spicy.
Crypto market: the time for adjustments
The crypto market, long boosted by optimistic forecasts, is undergoing a painful adjustment. The Fear & Greed index compiles several factors:
- Volatility (25%), rising sharply in recent days;
- Trading volumes (25%), which indicate panic movements;
- Bitcoin dominance (10%), still solid despite the storm.
These metrics indicate a market searching for benchmarks, especially with the U.S. Federal Reserve about to tighten monetary policy. The prospect of a tightening in 2025 has traders on edge, fearing new pressure on BTC.
In parallel, speculations about a U.S. government strategy to stockpile Bitcoin add to the confusion. So, is it a consolidation strategy or just a pause before a new surge? The market is holding its breath.
All cards are on the table: if the Fed plays its role as a catalyst, Bitcoin could target a new ATH as early as March 2025. A month and a half to prepare, that’s short, so get your action plans ready!
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La révolution blockchain et crypto est en marche ! Et le jour où les impacts se feront ressentir sur l’économie la plus vulnérable de ce Monde, contre toute espérance, je dirai que j’y étais pour quelque chose
DISCLAIMER
The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.
