- Will crypto recover? It’s the burning question as BTC falls back to $94K.
- The path ahead may be volatile, but it can also be full of opportunity for those willing to stand firm.
Coincidence or not, the FOMC meeting aligned perfectly with Bitcoin [BTC] with an all-time high of $108,000. A small ‘blip’ on the macro front was enough to send shock waves through the market.
Within a few days, the previous week’s gains were wiped out, leaving Bitcoin teetering at a critical support level at $93,000. What seemed like solid profits are now either breaking even or running at a loss.
It is clear that these HODLers are looking for recovery. But to truly understand whether crypto can recover, we need to look beyond the speculation and explore the past, present and future of this volatile market.
Key factors that distinguish the past from the present
History has a lot to teach us in the crypto market, and the number ‘four’ seems to have a special meaning. Every four years the market faces a crucial test, with the ripple effects being felt over the next three years.
Think back to 2020, when Bitcoin was thrust into the spotlight as the pandemic disrupted traditional investment opportunities like bonds, banks and government rates.
In response, Bitcoin rose by almost 320%, from $10,000 in October 2020 to $42,000 in January 2021. This marked the beginning of a new era for BTC.
Fast forward to today, and Bitcoin is up about 140% over the past four years. This growth is driven by a ripple effect of factors including the post-halving surge, election liquidity and inconsistent macro trends.
But the real game changer? Institutional capital injected into BTC. As AMBCrypto notes, this influx will be crucial in the coming months. Not only will it help the crypto market recover, but it could also guide BTC through the volatile path ahead.
This year, however, a downside is emerging: ‘surviving’. Over the past four years, debt has flooded the market, creating an additional layer of risk.
Source: Coinglass
The impact is clearly visible in the increase in open interest (OI), which recently reached a record high. As Bitcoin approached the $100,000 mark, the market saw a whopping $47 billion in leveraged positions, with traders betting in both directions: up and down.
With these factors in mind, when will crypto recover?
The next support line for Bitcoin is shaping up to be a battlefield, and for now the bears are firmly in control.
However, there is more going on than just market mechanisms. AMBCrypto raises an important point: the 25 basis point FOMC rate cut was intended to signal a “healthy” economy.
The logic behind this is simple: lower borrowing costs should lead to higher purchasing power, which should theoretically support Bitcoin’s growth.
But the opposite happens. Instead of fueling Bitcoin’s rise, the dollar is strengthening. This suggests that retail investors are flocking to traditional safe havens, such as the dollar and bonds, rather than taking risk in the crypto market.
This dip could be exactly what the market needs to reset and recover. In fact, a strong entry point could emerge around $90,000, reigniting FOMO and bringing buyers back into the fold.
That said, the stakes are high. With $671 million in net outflow from Bitcoin ETFs, it is clear that investors are becoming more cautious.
Read Bitcoin’s [BTC] Price forecast 2024-25
It is clear that we are at a crossroads here. This could be a make-or-break moment for Bitcoin.
As we move forward, it will be essential to keep an eye on the dollar index and ETF flows, and most importantly – who is holding strong. This is the moment when diamond hands can shine, but the road ahead will certainly be rocky.