Bitcoin Hits $90K Once More — But How Low Before the Next Pullback?

The debate is getting heated as to whether Bitcoin will make a pullback after its previous day’s rally, surpassing the $90,000 mark. This rebound is very significant as it was during the November’s extreme volatility. Bitcoin’s November crash had left investors in dismay, but this rebound seems to have induced fresh confidence.

However, it is amid this rally that rumors of an even harder pullback have surfaced. This has once again left investors confused about when to enter the market or whether to enter the market at all. In this article, we will review Bitcoin’s latest rally and the news that is draining confidence amidst this fresh bull run.

Factors That Are Indicative Of A Pullback

Several technical and macroeconomic factors indicate that there could be a pullback as there is a rally underway. This is what has caused the loss of confidence among traders. Inflation and interest rate hikes still remain obscured; this is concerning to the crypto market, as a “risk-off” strategy adopted by the Federal Reserve may cause a loss in risk appetite among traders and investors.

The macroeconomic factors that served as the headwind for the November volatility have not gone away, and this lingering tension could cause a pullback. A big concern, however, is the lack of market liquidity that Bitcoin is experiencing at the moment. This amplifies the volatility and destabilises the market. Today’s Bitcoin trading volume reached 91,196 BTC, reflecting current market activity amid the $90K rally.

This latest bull run that took Bitcoin over the $90K mark was amidst shrinking liquidity. Analysts have also noted that some traders have “realised losses” even during this bull run. This could potentially point towards investors exiting the market, minimizing their losses.

If this trading volume continues as is, with further volume drop, high selling pressure could swallow the market, and a pullback will become an inevitability. The November crash was partly fueled by large-scale liquidations of leveraged positions. If this dynamic repeats, key support levels could be breached again, fueling the idea of a pullback. This could then become proof that this bull run was one that was too short-lived.

A Positive Outlook: The Rally Might Continue

The rebound itself is indicative of a returning investor confidence. There is major incoming news that could become a pillar for supporting Bitcoin’s latest rally past the $90K mark. One of the key news items is that a state pension fund is acquiring Bitcoin ETF funds. This level of institutional support is what Bitcoin needs right now if it is to continue its rally.

Then there are the analysts with a long-term positive outlook who consider the November drop as nothing more than a healthy price correction. According to them, this type of pullback is normal in volatile markets like cryptocurrencies and especially the flagship asset of the crypto market, Bitcoin. They assess that this drop is nothing more than a part of the corrective cycle of Bitcoin, and that this has happened before.

Technical Analysis

Technical analysis provides crucial insights into potential future price movements. The upside is that the key resistance points are a long way up at the $92,000 and $93,000 mark. Overcoming these resistance points is no child’s play, but if Bitcoin can overcome them, Bitcoin’s present rally can be sustained, and Bitcoin can once again aim for a $100,000+ price point.

On the downside of technical analysis, it has become clear that the key support levels are at $89,750 and $88,500. These levels are very close to the $90,000 mark, and a simple drop below any of these support levels could mean that the narrative of the pullback will gain momentum.

While the moving average remains positive, the general trend of technical indicators sends mixed signals.

Conclusion

To summarize, it seems that whether the Bitcoin pullback will occur is a difficult question to answer, especially with no clarity from the technical indicators and macroeconomic factors remaining in a pending state. While there is a chance for a pullback, it is not guaranteed that this pullback will occur.

All we can say at this moment is that investors must stay vigilant and exercise caution. The recent volatility serves as a powerful reminder of how volatile the risk-asset market is. Without caution and proper risk management, the market’s unpredictable nature can catch investors off guard.