The cryptocurrency market was hit by selling pressure again this week as headwinds from global economic factors continued to emerge. Crypto, including Bitcoin, dropped due to the Federal Reserve minutes, which showed that the Fed might reconsider its borrowing costs as inflation indicators emerged.
The total market capitalization of all cryptocurrencies decreased to $3,37 trillion on January 9, following several sessions of 4% decline. Bitcoin’s pullback to $95,200 this week fell below the critical support of $92,500.
The researchers at QCP Capital said in a Telegram that macroeconomic risk factors challenged the market. The trading desk noted that Federal funds futures based on the Federal Reserve’s minutes out on January 8 pointed to fewer rate cuts; Fed Governor Christopher J. Waller stressed inflation risks.
The Fed indicated that they will slow down the pace of rate cuts given that the risks of inflation have increased. Yesterday’s ADP employment survey also added to macro uncertainty, showing a slowdown in both private sector hiring and wage gains. This heavily contrasted with Tuesday’s JOLTS jobs openings which painted a stronger labour market.
QCP Capital on crypto downslide
Bitcoin Likely To Consolidate Amid Institutional Demand
QCP analysts expected Bitcoin’s price to stay between $92,000 and $95,000 in the short term. However, they set downside risks, adding that if BTC penetrates the $90,000 mark, it will trend toward the $92,000 figure.
Worsening the bear outlook, the U.S. Department of Justice (DOJ) okayed the sale of $6.5 billion in Bitcoins from the Silk Road just days before Donald Trump’s inauguration, which puzzled crypto enthusiasts. Moreover, Trump promised to stop selling BTC from governmental stock and create a national Bitcoin fund, so the DOJ’s decision’s timing left some confused.
Even yet, prolonged mass Bearish pressure may be mitigated by continued institutional attention to Bitcoin propositions. Other corporate giants, including MicroStrategy and Wall Street’s first Bitcoin spot exchange-traded products (ETPs), maintain the demand.
The trillion-dollar asset manager company, Fidelity, has signaled that the adoption of Bitcoin by countries, corporations, and governments will rise in 2025. Such developments could add long-term support to the price of Bitcoin and improve the situation in the overall cryptocurrency market.
Conditions on a macroeconomic level remain volatile, and so do Bitcoin and the crypto market. However, prospects of a near-term sentiment recovery are hampered by lingering concerns over inflation and continued short-term selling by governments or central authorities.
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