Bitcoin price has sold off again on January 8, forming a bearish engulfing candle on the daily chart. This specific daily price drop is the second sharp decline of BTC in 19 weeks.
With the market momentum trending unstable, Bitcoin traders and commentators have expressed their views on the possibility of Bitcoin price continuing to correct below $90,000.
Stablecoin Supply Enters "Discovery" Phase
The lightning-fast collapse of Bitcoin from $102,760 to $92,500 came after data from the Bureau of Labor Statistics showed 8.1 million jobs were created at the end of November. This figure was higher than the expected 7.74 million jobs, indicating the U.S. economy is improving and leading to the weakening of the stock and cryptocurrency markets.
While this development has sparked more pessimistic speculation, crypto analyst Miles Deutscher has emphasized that the stablecoin supply has entered a "price discovery" phase, meaning there is more liquidity in the current cryptocurrency ecosystem. The increase in stablecoin supply highlights the potential for capital inflows in the coming months.
Similarly, market analyst Jamie Coutts said there will be more liquidity, potentially leading to higher BTC prices in the next six months. Based on the strength of the rising U.S. dollar, Coutts said Bitcoin may have bottomed at $80,000. However, the fundamental strength of BTC suggests the market's expectations are still much higher.
Liquidity has been more evident in the current price rally compared to previous rallies. Data analyst Roman Zinovyev recently highlighted that the USD trading volume on the Binance Spot market has been gradually increasing since 2020. As shown in the chart, the U.S. market share reached an ATH of 42% in the 2024-2025 trading session.
Does On-Chain Bitcoin Data Indicate a Recovery?
The strong on-chain developments do not negate the fact that Bitcoin's 5.15% drop has erased four days of price gains. The immediate recovery potential after a drop of 5% or more is also not favorable.
As illustrated in the chart, Bitcoin has experienced a retreat of 5% or more 15 times since January 2024. Out of those 15 instances, BTC recorded an immediate gain only three times, or 20% of the time. Therefore, from a probabilistic standpoint, BTC is unlikely to undergo a sudden bullish trend reversal right now.
Trader Krillin said that Bitcoin may consolidate between $92,000 and $90,000 in January before the market sees a strong rally next month.
Investor Jelle shared a similar outlook after the current market bids failed to keep BTC above $100,000. The investor expects a low around $90,000 to be realized and stated,
Back to the original plan; wait for the low to be confirmed before aiming for new highs.
If the daily close is below $90,000, Bitcoin could be expected to decline further. Such a price level would confirm an inverse head and shoulders pattern, potentially leading to severe consequences. For instance, BTC could drop an additional 20%, targeting a price of $71,500.
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