Bitcoin (BTC) is hovering around $87,700 at the time of writing on Wednesday after falling more than 36% from its record high of $126,199 in early October. The range-bound price action is further supported by mixed inflows into spot Bitcoin exchange traded funds (ETFs). Furthermore, a report suggests that BTC price action could be stronger this week, as US markets will be closed in the second half due to Thanksgiving.
Indecision among institutional investors
According to SoSoValue data, institutional inflows reflect mixed sentiment so far this week, as Bitcoin spot ETFs are seeing alternating inflows and outflows – with inflows of $128.64 million on Tuesday, in contrast to inflows of $151.08 million on Monday. This highlights indecision among institutional investors, as fluctuations in ETF inflows suggest a cautious approach toward the largest cryptocurrency by market capitalization.
On Wednesday, the strategy said on its official
The firm said that at a BTC price of $25,000, the coverage will remain 2x, highlighting that it can easily cover its loans even if BTC falls sharply.
Bitcoin consolidates after deep correction
Bitcoin price started the week on a slightly positive note, recording a mild recovery after its fourth consecutive negative weekly close, marking BTC’s deepest decline since the 2022-2024 era. The largest cryptocurrency by market capitalization has now suffered a 36.24% decline from its all-time high of $126,199 set on October 6.
A report from K33 on Tuesday highlighted that this week could offer breathing room and consolidation for BTC, as US markets will be fully closed on Thursday and partially closed on Friday due to the Thanksgiving holiday.
The report further notes that Bitcoin has underperformed the Nasdaq index (as measured with the Invesco QQQ ETF) on 21 of the last 30 trading days, or 70% of all trading days over the past month. This current situation is rare and the relative underperformance has exceeded 70% for the first time since July 2024.
Historically, BTC has shown similar consistent underperformance on six previous occasions since 2020 – in July 2020, December 2021, June 2022, January 2024, and July 2024. Each of these three most recent periods of isolated underperformance was associated with a clear negative crypto-specific narrative: Mt. Gox and the German sale (July 2024), Grayscale outflows (January 2024), and the transition (June 2022).
“Correlations trended lower in these environments,” the analyst reports.
This recent stretch of comparative underperformance has emerged from the October 10 deleveraging, but has also come with aggressively rising correlations, with BTC following price impulses in equity indices, although there has been a tendency for deeper declines on down days and worse recoveries on up days. This behavior points to aggressive, sticky relative selling in BTC amid widespread risk-off across all markets.
Additionally, the price of BTC relative to the QQQ index has fallen to 143, the lowest level since November 5, 2024, as shown in the chart below. In other words, all the relative strength following the US presidential election has now been taken back. Those participating in BTC today are very different from those participating in BTC during the 2021 era, and even their impulse is higher during the first quarter of 2024.
The analyst concluded, “We view BTC’s current relative pricing to other risk assets as a significant detachment from its underlying fundamentals and consider BTC a strong relative buy at current levels for any long-term-focused investor.”
Bitcoin price forecast: BTC holds steady after four weeks of decline
Bitcoin price found support around a key psychological level around $80,000 on Friday, recovered slightly over the weekend and closed above $88,300 on Monday. At the time of writing on Wednesday, BTC is stable at around $87,700.
If BTC continues its recovery, it could extend the rally to the next major resistance at $90,000.
The Relative Strength Index (RSI) on the daily chart reads 32, after slipping below the oversold range last week, suggesting that the downside pressure may ease as the bearish momentum shows early signs of exhaustion. Additionally, the Moving Average Convergence Divergence (MACD) indicator on the same chart shows descending red histogram bars, with the MACD line ready to cross above the signal line.
BTC/USDT daily chart
On the other hand, if BTC continues to decline, it could extend the decline to the key psychological level of $80,000.
Bitcoin, Altcoins, Stablecoins FAQ
Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to be used as money. This form of payment cannot be controlled by any one person, group or entity, which eliminates the need for third party involvement during financial transactions.
Altcoins are any cryptocurrency other than Bitcoin, but some people also consider Ethereum a non-altcoin because of the forking of these two cryptocurrencies. If this is true, then Litecoin is the first altcoin built from the Bitcoin protocol and, therefore, an “improved” version of it.
Stablecoins are cryptocurrencies designed to have a stable price, their value backed by the reserve of the asset it represents. To achieve this, the value of a stablecoin is pegged to a commodity or financial instrument, such as the US dollar (USD), whose supply or demand is controlled by an algorithm. The main goal of stablecoins is to provide on/off-ramps for investors looking to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value as cryptocurrencies, in general, are subject to volatility.
Bitcoin dominance is the ratio of the market capitalization of Bitcoin to the total market capitalization of all cryptocurrencies. This provides a clear picture of the interest in Bitcoin among investors. High BTC dominance typically occurs before and during bullish rallies, with investors resorting to investing in relatively stable and high market capitalization cryptocurrencies like Bitcoin. A decline in BTC dominance usually means that investors are moving their capital and/or profits into altcoins in search of higher returns, which usually triggers the explosion of altcoin rallies.
