Bitcoin drops to $92,500 as Fed policies and $631 million in liquidations shake market

Bitcoin’s price fell to $92,500 on January 7 after briefly surpassing $100,000 earlier that day, marking the first breakout of the psychological milestone since December 19. Analysts attributed the correction to growing concerns about the Federal Reserve’s tight monetary policy and strong US economic data. According to Ryan Lee, President analyst Per Bitget Research, these factors have made cryptocurrencies less attractive as investments, leading to market corrections.

This price drop led to the liquidation of more than $631 million in long positions over the past 24 hours, as reported by CoinGlass. Market participants expect the Federal Reserve to keep interest rates unchanged at its meeting on January 29, with a 95.2% probability indicated by CME Group’s FedWatch tool. However, the first expected rate cut has been postponed to June 18 due to signs of economic resilience.

John Glover, chief investment officer at Ledn, believes Bitcoin’s current correction could deepen before a significant rally occurs. He expected Bitcoin to test the $90,000 level before rising to $126,000 and $128,000, describing the decline as part of a larger wave cycle. Likewise, cryptocurrency analyst Rekt Capital male That Bitcoin lost support at $101,165 and returned to a trading range between $91,000 and $101,165, underscores the importance of maintaining the $91,000 level to avoid further decline.

Minutes from the Federal Reserve’s recent Federal Open Market Committee (FOMC) meeting revealed a shift in monetary policy strategy, including a potential slowdown in interest rate cuts. This has increased uncertainty in the financial markets, with experts noting that such changes could significantly impact the cryptocurrency market.

Despite the short-term corrections, analysts remain optimistic about Bitcoin’s long-term prospects. Some expect the cycle to reach a potential peak of over $150,000 in late 2025, driven by an expected $20 trillion increase in the global money supply. This growth could direct up to $2 trillion in investments towards Bitcoin, boosting its market value.

The interplay between macroeconomic factors and cryptocurrency market dynamics continues to be a critical focus for investors. As Bitcoin consolidates, experts are closely monitoring the Federal Reserve’s actions and economic indicators to gauge the potential path of the cryptocurrency market in 2025.