What Triggered Bitcoin’s Decline?
This downturn in Bitcoin’s value comes amid a broader market slump, partly influenced by the release of DeepSeek R1. This development has disrupted the AI sector and adversely impacted the prices of AI-themed tokens. With market conditions shifting, investors are now closely watching Bitcoin’s price trajectory, wondering how much further it could fall.
Could Bitcoin Drop Below $90,000?
Bitcoin failed to stay above the key $100,000 level on January 27 and pulled back to the $98,000 level for support. Analyst AlphaBTC also highlighted Bitcoin’s relative weakness around the $100,000 level, noting that both Bitcoin and TradFi futures have come under stress. He felt that failure to retake $100,000 might see prices dip below $90,000, at which point critical situations could be encountered by the cryptocurrency.
Meanwhile, Arthur Hayes, BitMEX’s co-founder, believes Bitcoin could drop to a range of $70,000 to $75,000. He speculated that could usher in a “mini financial crisis,” which could then trigger new monetary stimulus. It would then be ready to jump all the way up to $250,000 by year’s end, he says.
Michael van de Poppe, founder of MN Capital, offered a more optimistic perspective. He reassured his followers that the current downturn is likely a temporary reaction rather than a sign of deeper market trouble. Van de Poppe identified the $99,000–$98,000 range as an appealing entry point for investors. However, he cautioned that failure to sustain demand in this range could result in Bitcoin dipping further into the $89,500–$91,500 zone.
The Role of Key Support Levels
From a technical standpoint, Bitcoin’s price currently hovers above the $97,900 support level, which aligns with the 50-day exponential moving average (EMA). This level is crucial, as it represents a key area of liquidity, supported by data from CoinGlass. If Bitcoin can hold above this level, it might find a foundation for its next upward move.
However, breaking below the 50-day EMA could spell trouble. If the price slips below $90,000, Bitcoin may seek demand at the 100-day EMA, which sits around $91,482. This scenario could signal a prolonged consolidation phase, potentially testing investors’ patience through the first quarter of the year.
Investor Sentiment and Market Outlook
Despite the recent sell-off, many experts caution against panic. Current market conditions indicate short-term overreaction rather than long-term trends. Historically, Bitcoin has shown resilience and bounced back from key setbacks in price. Analysts note that one should pay more attention to important support levels and market liquidity zones while dissecting the shorter-term outlook of the cryptocurrency.
The price of Bitcoin faces critical challenges to maintain above $90,000. In such a case, a rebound from these levels may provide an indication of renewed bullish momentum, while its breakdown may be negative for further declines in the price. As market dynamics evolve, Bitcoin investors should follow technical indicators and broader market factors closely to make informed decisions.
