Bitcoin [BTC] has experienced a decline of 5.88% in the last 24 hours. It had surged to $109,588 on January 20th as per Binance trading data but has been on a downward trend since then.
The rapid losses in the recent hours do not necessarily indicate weak underlying strength of BTC.
The introduction of China’s DeepSeek LLM model has started influencing the U.S. stock market. Nasdaq 100 futures were down by 2.9% at the time of writing and were projected to wipe out $1 trillion from the U.S. equity market at the opening.
As a result, this anxious sentiment has had a ripple effect on the cryptocurrency market and Bitcoin. The market might also be reducing risk exposure in anticipation of the upcoming FOMC meeting later this week.
Bitcoin Price Forecast — Role of Range Formation
For the past couple of months, Bitcoin has been trading within a range spanning from $92k to $106k. The pivotal mid-range point at $99k has been significant in recent weeks as a level of support and resistance.
The recent selling pressure has driven BTC towards the mid-range support level.
It’s important to note that the trading volume has been relatively low, but this could change with the start of the New York trading session. Hence, traders should exercise caution in the short term.
If the price drops below the mid-range level, a more significant price correction to $92k could be expected.
Therefore, the short-term Bitcoin price forecast is pessimistic. The MACD on the daily chart has formed a bearish crossover, indicating a weakening of bullish momentum.
On the contrary, the A/D indicator has been showing higher lows. Analysis using the A/D indicator reveals that the selling pressure was triggered by expectations in the U.S. stock market and not necessarily by weakness in BTC.
According to Coinalyze data, bearish sentiment has been dominant in recent hours. The funding rate turned negative during the swift price decline, while the Open Interest saw an increase as prices dipped below $102k.
This suggests a rise in short selling and a bearish outlook in the derivatives market. Crypto analyst Axel Adler mentioned in a post on X that panic selling wasn’t evident, as indicated by the short-term holder profit loss to exchanges.
Disclaimer: The views expressed do not constitute financial, investment, trading, or any other form of advice and represent solely the writer’s opinions.