Bitcoin staged a big reversal this week, climbing above $99,000 Wednesday, two days after dipping below $90,000 in a macro-driven sell-off . If the cryptocurrency drops below that key support level again, however, forced or panic selling could invite even steeper declines, according to Standard Chartered’s Geoff Kendrick. “A clean break below $90,000 (beyond the temporary dip seen on Jan. 13) could see bitcoin break to the low $80,000s, driving a further 10% decline in digital assets across the board,” he wrote in the note. “Once such a retracement runs its course, we would recommend accumulating longs again.” Most bitcoin sales “in the past few days” have come at a loss and 14% of bitcoins are being held at a loss, Kendrick pointed out. Additionally, purchases of bitcoin ETFs and spot bitcoin purchases by MicroStrategy since the U.S. presidential election are only now breaking even – given average buy prices of $94,000 for ETFs and $93,000 for MicroStrategy. The “risk of mark-to-market pain is building” and “can cause a sell-off to become self-fulfilling,” he said. If bitcoin sees that extra drop toward $80,000, bitcoin ETFs could log new record daily outflows exceeding $1 billion, he said. The worst day of outflows to date was Jan. 8, when bitcoin ETFs recorded $583 million of outflows. The post-election crypto rally fizzled into the end of 2024 after Federal Reserve Chair Jerome Powell sounded an inflation warning on Dec. 18, and bitcoin suffered even steeper losses last week as a spike in bond yields prompted investors to dump growth-oriented risk assets. Bitcoin briefly dropped below $90,000 on Monday, but bounced above $96,000 Tuesday around a light inflation reading. It rose to $99,000 Wednesday after another encouraging inflation report and strong bank assets further stoked investors’ appetite for risk assets. Kendrick reiterated his view that bitcoin could reach $200,000 this year, as institutional inflows resume under the incoming pro-crypto administration. —CNBC’s Michael Bloom contributed reporting.
