Bitcoin (BTC) Looks Weak Amid US Dollar Strength, Will $90K Support Hold?

Bitcoin (BTC)‘s price has dropped below $95,000 and missed the widely expected Santa Claus rally. This disappointing performance comes despite positive signals from on-chain metrics and renewed institutional interest. The cryptocurrency’s price decline during the past few weeks reflects increased selling pressure driven by macroeconomic factors and profit-taking activity.

Fed’s Hawkish Stance Dampens Bitcoin ETF Momentum

The chart below shows the net inflow and outflow of Bitcoin Spot ETFs, represented by green and red bars. The positive net inflows suggest increased demand and investment in Bitcoin ETFs, while negative net outflows indicate reduced interest. The chart presents periods of high inflows correlating with BTC price increases and outflows aligning with price declines. The fluctuating volumes reflect investor sentiment and macroeconomic factors influencing the cryptocurrency market.

A strong net inflow of $475.20 million was observed on Thursday last week, breaking a four-day streak of outflows during the Christmas holiday. However, Bitcoin failed to rally due to risks stemming from hawkish comments by the Federal Reserve during its December 17 meeting. These comments fuelled a strong rally in the US dollar, putting significant pressure on the crypto market.

The strong inflow on Thursday was offset by significant outflows on Friday, resulting in a net outflow of $287.90 million, as shown in the chart below. This outflow suggests investors continue withdrawing funds and reducing their exposure to Bitcoin ETFs. The Federal Reserve’s hawkish comments influence the market, which could keep Bitcoin under pressure in the short term. Additionally, these outflows align with the year-end pattern of increased withdrawals, likely driven by profit-taking. If the outflow trend persists into early January, it could indicate a deeper correction in Bitcoin’s price.

MicroStrategy announced a $516 million BTC purchase, and similarly, Japan’s Metaplanet Inc. acquired 619.7 BTC for $58.9 million. However, the market showed a muted response as broader selling pressure overshadowed these large-scale purchases. This suggests that other major investors are taking profits or repositioning their portfolios. Despite this, the overall technical picture of Bitcoin remains positive, and the current correction could present an opportunity for investors to position the next Bitcoin rally.

Bitcoin (BTC) Weekly Chart – Price Correction from Target

The weekly chart for Bitcoin shows that the price has been trading within a broad ascending channel since 2018. The cup pattern is formed from 2021 to 2024, which indicates a bullish pattern. The price consolidation near the end of this cup pattern formed a descending broadening wedge, which broke out around the $65,000 to $75,000 zone. This breakout initiated a new surge, pushing Bitcoin toward the first target at the $105,000 zone at the black trendline.

After reaching this target, the price began to pull back. A break below $85,000 could push Bitcoin further down toward the neckline of the cup pattern, around $75,000. On the other hand, a break above $108,000 could initiate another rally toward the $250,000 zone. The RSI near 65 indicates moderate bullish momentum, suggesting potential for further growth without entering overbought conditions.

Bitcoin (BTC) Daily Chart – Bullish Price Structure

The daily chart for Bitcoin shows that the price is trading within an ascending broadening wedge pattern and appearing weak around the support zone. The $105,000 target was achieved at the 2-year trendline, and the price is now in correction mode.

Bitcoin hovers near the support zone between $90,000 and $95,000. The 50-day and 200-day SMAs are trending upward, which shows a bullish trend. If Bitcoin holds this support zone, the price could attempt another rally toward $105,000. However, a breakdown below the support could lead to further downside risk toward the $85,000 area.

Bitcoin (BTC) 4-hour Chart – Ascending Broadening Wedge Pattern

The 4-hour chart for Bitcoin shows an ascending broadening wedge pattern, with the price consolidating around the support zone between $90,000 and $95,000. The $90,000 level has become pivotal due to a month-long consolidation. A break below $90,000 would breach this support and likely lead to further declines towards $85,000. On the other hand, a recovery above $99,000 could drive Bitcoin’s price higher, targeting levels between $105,000 and $112,000.

Final Thoughts

In conclusion, Bitcoin’s price remains under pressure, trading below $95,000 amid macroeconomic challenges and year-end profit-taking. Hawkish Fed comments and a strong US dollar have weighed heavily on the market, driving ETF outflows. The $90,000 level is pivotal support, and a break below this level could lead to further downside. Conversely, a break above $99,000 could reignite momentum, pushing the price toward $105,000 and $112,000. Despite the current correction, Bitcoin’s long-term structure and ongoing institutional purchases indicate the potential for recovery and a renewed rally in the coming weeks and months.