Bitcoin (BTC) experienced a sharp decline on November 26, falling by 4% to drop below the crucial $93,000 mark. The decline, which saw Bitcoin hit an intraday low of $92,785, came as a result of multiple factors, including President-elect Donald Trump’s announcement of new tariffs, the upcoming expiry of $9.4 billion in Bitcoin options, and market reactions to economic data, notably the PCE inflation report.
Factors Behind Bitcoin’s Drop
The steep drop followed a series of rejections at the $100,000 level, and the latest dip is considered one of the largest single-day declines for BTC since Trump’s election victory. Analysts point to a combination of factors influencing the retreat, including:
Trump’s Tariff Announcement: On November 26, President-elect Trump announced the imposition of additional tariffs on imports from China, Mexico, and Canada. The move sent US equity futures into a slump, dampening market sentiment and putting selling pressure on both Bitcoin and the broader cryptocurrency market.
Profit Taking and ETF Outflows: As Bitcoin had recently hit new highs, profit-taking by investors, as well as outflows from cryptocurrency exchange-traded funds (ETFs), added to the downward pressure.
Bitcoin Options Expiry: With $9.4 billion in Bitcoin options contracts set to expire on Friday, the market is bracing for increased volatility. According to data from Deribit, Bitcoin’s options market has seen a 124% spike in daily trading volume, with open interest jumping 2% to $42.6 billion. The expiry could result in sharp price fluctuations, with the current “max pain” point at $78,000, suggesting that Bitcoin’s price may gravitate toward the $70,000–$82,000 range.
Core PCE Data Impact: The release of the US core Personal Consumption Expenditures (PCE) data on Wednesday is another key factor affecting market sentiment. A higher-than-expected reading could indicate persistent inflationary pressures, potentially influencing the Federal Reserve’s approach to interest rates and, in turn, Bitcoin’s price trajectory.
Bitcoin’s Market Outlook
Despite the current pullback, analysts like Tony Sycamore of IG Australia suggest that the correction is a “much-needed pullback” to work off overbought conditions, rather than a sign of a deeper reversal. Sycamore reminds investors that markets, including crypto, rarely move in straight lines, and a correction after a rally is common.
However, some analysts are sounding cautious. Crypto analyst CrediBULL Crypto has warned that the break below the $94,000 support could open the door for further declines, with a potential drop to as low as $80,000. Meanwhile, Joe Consorti, another well-known Bitcoin analyst, points out that Bitcoin’s price has closely followed global M2 money supply trends since September 2023. If this correlation continues, Bitcoin could face a 20-25% correction in the near term.
Long-Term Outlook: Institutional Accumulation
Despite the short-term volatility, large institutional players are continuing to accumulate Bitcoin. On November 25, MicroStrategy made headlines by purchasing an additional 55,000 BTC, further solidifying its position as one of the largest corporate holders of Bitcoin. Bernstein analysts have also raised their stock target for MicroStrategy to over $600 in light of this move. Other entities, like Semler Scientific, have also made recent BTC purchases, signaling that institutional confidence in Bitcoin remains strong.
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