Bitcoin experienced a decline on Friday, dropping below the $95,000 mark as shifts in macroeconomic conditions prompted a reevaluation across digital asset markets. This 3% intraday drop reflects the complex interplay of liquidity dynamics and institutional sentiment towards Bitcoin.
According to James E. Thorne, Chief Market Strategist at WellingtonAltus, the recent price drop is indicative of significant structural changes at the Federal Reserve. Thorne notes that the reopening of the U.S. government following a 43-day shutdown and the Treasury”s renewed management of the Treasury General Account (TGA) are signs of impending liquidity injections into the financial landscape.
Thorne anticipates that the current phase of quantitative tightening will soon conclude, setting the stage for continued interest rate cuts until the federal funds rate approaches 2.75%. He posits that the reshaping of the Federal Open Market Committee by 2026, including the potential replacement of Chair Jerome Powell, could signal an end to the Progressive Left Keynesian approach that has influenced the Fed”s policies.
Highlighting the challenges posed by these economic policies, Thorne points to a housing recession resulting from the Fed”s historical missteps. He emphasizes that past data and tightened financial conditions have adversely affected credit availability. Nevertheless, he remains optimistic about the prospects for Bitcoin, citing an increase in institutional adoption driven by upcoming regulatory clarity and the inherent digital scarcity of BTC.
As Bitcoin trades at $95,558, the market faces a critical moment. The Parabolic SAR indicator suggests ongoing trend weakness, with the Breakout Probability model indicating a 55.57% likelihood of further downside. The daily Relative Strength Index (RSI) is at 31.15, signaling a near-oversold condition, yet without any bullish divergence present. The BBP indicator reflects a deep negative value, indicating that bearish momentum is increasing.
Moving averages complicate the outlook, with Bitcoin significantly below the 50-day, 100-day, and 200-day simple moving averages, which now serve as resistance around $110,000 to $112,000. A rebound from the $94,500 level is essential to avert a deeper decline towards the next high-liquidity support area at $92,000. Should buyers manage to defend this critical zone, a recovery towards the $100,000 threshold may become plausible, potentially followed by a retest of $105,000 if market momentum shifts positively.
However, for a bullish continuation setup to emerge, Bitcoin must break above $110,078, where the SAR and SMA confluence currently cap the market structure. Conversely, a daily close beneath $92,000 would likely confirm an extended bearish cycle, possibly leading to prices around $88,500.
