Bitcoin’s price plummeted to a low of $91,170 on Monday, contributing to a significant downturn in both the cryptocurrency and stock markets.
The leading cryptocurrency, Bitcoin (BTC), has entered a technical correction, declining over 16% from its peak this year.
This drop is largely attributed to growing stagflation concerns in the United States and its potential implications for the Federal Reserve’s monetary policy.
In a notable economic move, new tariffs have been unveiled on various goods traded between the U.S., Canada, and China. These tariffs are expected to drive inflation higher, compelling companies to raise prices, which may result in headline and core inflation remaining above the 2% target for an extended period.
Consumer spending, a vital component of the U.S. economy, could also be impacted. With uncertainty surrounding these tariffs, many consumers may choose to delay significant purchases until there is clearer insight into trade negotiations.
The Federal Reserve may adopt a posture of maintaining elevated interest rates longer, which could further affect risky assets like Bitcoin and equities.
The dramatic decline in Bitcoin’s price has triggered a surge in liquidations, as exchanges liquidated leveraged bullish positions during the downturn. Recent reports indicate that daily liquidations surged to nearly $400 million, marking the highest level in several weeks.
Experts outline three key factors that could lead to a rebound in Bitcoin’s value following Monday’s decline. Firstly, recent trends indicate that Bitcoin typically ends the week on a positive note after Mondays with similar declines.
Secondly, historical seasonal data reveals that Bitcoin has consistently risen in February over the past four years, averaging returns of approximately 14% since 2013, making it the second-best month for the cryptocurrency after November.
Lastly, there is speculation that trade negotiations may commence soon, with possible strategies being employed to secure better deals. A resurgence in crypto and stock values is anticipated in conjunction with these discussions.
Bitcoin Price Forecast
The latest daily chart indicates that Bitcoin’s price has been relatively stable over recent months. With a recent low of $91,170, it has not breached this level since November. This phase of consolidation has led to the formation of a bullish flag pattern, characterized by a long vertical line alongside a rectangle shape.
Moreover, Bitcoin remains above both the 50-day and 100-day Exponential Moving Averages, suggesting that a significant bullish breakout could be on the horizon later this month, with an initial target set at this year’s high of $109,200.
