Bitcoin's highly anticipated rally toward the $100,000 threshold faltered as holiday trading gave way to renewed market volatility, with the cryptocurrency dropping 4% in recent sessions. The decline has reignited discussions about Bitcoin's near-term trajectory and broader trends in the crypto market, as well as its correlation with macroeconomic conditions.
Bitcoin rose to just above $99,800 early Thursday, tantalizingly close to breaking the six-figure barrier. However, the rally quickly reversed as Asia opened for business, pushing Bitcoin's price down to $95,300. The drop represented a 3.1% decline over 24 hours. The broader CoinDesk 20 Index fared even worse, shedding 4.2% amid losses ranging from 4% to 7% across key cryptocurrencies like Ethereum (ETH), Solana (SOL), and XRP.
The holiday period, characterized by low trading volumes, saw a glitch on TradingView's Bitcoin dominance chart that erroneously reported Bitcoin's market cap share collapsing to 0%. While the issue was resolved, the anomaly appeared to trigger knee-jerk sell-offs. Monitoring platform CoinGlass reported approximately $33 million in long Bitcoin liquidations during the four-hour window following the error.
Market participants remain divided on the broader implications. Some, like trader Satoshi Flipper, questioned the market's overreaction. "People now dumping over TradingView?" he remarked on X (formerly Twitter). The event underscored the heightened sensitivity in a market where technological mishaps can amplify volatility.
Bitcoin's dominance, a key metric indicating the cryptocurrency's share of the overall market, has been a topic of debate. In November, dominance peaked at 61.5%, sparking discussions of an impending "altseason," where altcoins outperform Bitcoin. Analysts like Aqua noted, "BTC Dominance reached 2021 breakdown level and rejected," hinting at a possible resurgence for altcoins in 2025.
The cryptocurrency's retreat comes amid shifting macroeconomic conditions, particularly in interest rates. The 10-year U.S. Treasury yield has surged to 4.63%, nearing its 2024 high. The Federal Reserve's recent 50-basis-point rate cut initially buoyed markets, but longer-term rates have since climbed, creating potential headwinds. Macro researcher Jim Bianco observed, "If the Fed does not back off the rate-cutting talk, bond yields will go as high as needed to start breaking things, to break inflation."
Despite near-term challenges, bullish sentiment remains strong among long-term investors. Michaël van de Poppe, a trader and analyst, likened the altcoin market's potential to the Dotcom bubble of the early 2000s. "The Altcoin valuation are still substantially low. The total market capitalization is barely $1.5T. The http://Dot.com bubble was $10-15T," he noted. "That's a valid valuation for peak numbers in the coming years, through which it's not strange to expect 20-50x in 2025."
Eljaboom, a prominent Bitcoin investor, echoed this optimism, stating, "$BTC is preparing itself for the next leg up," and forecasting significant gains in the first quarter of 2025. Other analysts, such as Xoom, pointed to technical signals suggesting a breakout could take Bitcoin into the $110,000-$130,000 range by late January, with $120,000 as a realistic target.
