Will Bitcoin Price Drop to $65,000 Amid Bearish Sentiment?

Bitcoin faces potential downward pressure towards the $65,000 range as negative macroeconomic factors weigh on investor confidence.

Key Takeaways

Bitcoin's price recently fell to $69,385, down 4.8% over the past week and significantly below its yearly peak.
Geopolitical tensions, particularly in the Middle East, could lead to increased inflation and a shift away from cryptocurrencies.
U.S. inflation data may compel the Federal Reserve to keep interest rates high, adversely impacting speculative assets like Bitcoin.
Technical indicators suggest a bearish trend, with traders monitoring key support at $68,500.

Will Bitcoin price drop to $65,000 as bearish forces come into play?

Current Market Situation

As of now, Bitcoin's price has experienced a decline of 4.8% over the past week, dropping below the critical support level of $70,000. It is trading at $69,385, nearly 29% lower than its year-to-date high of about $97,500, and 45% below its all-time high.

The cryptocurrency is currently confronted with various geopolitical and macroeconomic factors that may drive its price down further, potentially reaching the $65,000 and even $60,000 marks.

Geopolitical Influences

Iran has recently declared a shift in its retaliation tactics in the Middle East, opting for ongoing strikes against the interests of Israel and the U.S. This escalation is aimed at punishing both nations and involves blocking oil shipments to them from the vital Strait of Hormuz, through which millions of barrels of oil pass daily.

This move is designed to push oil prices up to $200 per barrel, which could trigger increased global inflation, particularly affecting the U.S., which is sensitive to fluctuations in energy prices. Historically, such heightened tension in the Middle East has led investors to gravitate towards traditional safe havens instead of volatile assets like cryptocurrencies.

Federal Reserve's Response

On the U.S. economic front, February's core Consumer Price Index (CPI) data aligned with market expectations, compelling the Federal Reserve to maintain higher interest rates for an extended period. An ongoing conflict in the region that drives energy costs up further complicates this scenario, potentially delaying any changes to monetary policy.

As per the CME FedWatch tool, there is a 99.3% chance that the Federal Reserve will keep interest rates unchanged during the upcoming March Federal Open Market Committee (FOMC) meeting, currently set between 350 to 375 basis points. The likelihood of a rate cut in April stands at just 10.9%, a significant drop from 21% a month ago. It's worth mentioning that February's inflation data did not fully factor in the recent surges in oil prices, suggesting the Fed may adopt a more hawkish approach soon.

Implications of Rising Treasury Yields

Furthermore, U.S. yields on 10-year Treasury bonds have continued their upward trend, reacting to inflationary pressures in the market. Recently, these yields increased by several basis points, making the returns on government bonds increasingly attractive compared to the risks linked to cryptocurrencies.

Analyzing Bitcoin's Price

From a technical perspective, Bitcoin has seen another decline below the $70,000 threshold. Traders are now focusing on the $68,500 support level, but ongoing selling pressure indicates a potential bearish trend with a possible retracement towards the $65,000 support zone until global conditions stabilize.

BTC/USDT 24-hour price chart. BTC/USDT 24-hour price chart — March 12 | Source: crypto.news

On the 4-hour price chart, momentum indicators are revealing that a bearish structure is already forming. The MACD lines are close to indicating a bearish crossover, and the Relative Strength Index (RSI) is trending downward after previously reaching overbought levels.

As investors closely monitor these developments, it remains crucial to understand how global events and economic indicators will impact Bitcoin's future price movements.