Following a record high of nearly $112,000, Bitcoin experienced a 7% decline. This drop comes amidst profit-taking, escalating geopolitical tensions, and cautious signals from the Federal Reserve regarding interest rate cuts. While this dip may seem noteworthy, it likely reflects a pause in an otherwise robust uptrend driven by factors like surging demand for spot ETFs and limited supply.
Experts attribute this pullback to increased adoption of Bitcoin, as seen with prominent companies such as GameStop and Trump Media incorporating the asset into their treasuries. Additionally, daily mining output remains capped at just 450 coins, contributing to the tightening supply.
A 50% increase in Bitcoin price from its lowest point this year to its current level has prompted investor selling. This is a common occurrence following substantial price gains.
Factors influencing this price drop include concerns about trade between the U.S. and China, as well as the Federal Reserve’s cautious approach towards interest rate cuts. However, Bitcoin benefits from strong supply and demand dynamics, evidenced by rising spot ETF inflows exceeding $44 billion and increasing buying by companies like Trump Media.
Furthermore, the supply of Bitcoin on exchanges has decreased by 57% since its peak in March 2020, with this decline accelerating. Bitcoin’s supply now stands at 1.37 million coins, down from 3.22 million in the same period. This decline is likely to continue as only 450 coins are mined daily, and corporations such as Strategy buy thousands weekly.
While Bitcoin’s price has dropped by over 7% since its record high, it remains above key moving averages on the daily chart and displays a bullish flag pattern in technical analysis. The coin’s potential for further growth could be indicated by a cup-and-handle formation and an anticipated target of $144,650.