The price of Bitcoin has retreated from the highly anticipated $100,000 milestone as investors secure profits following the crypto asset’s strong rally after the US presidential election.
In a push to hit the $100,000 price, Bitcoin traded at $99,665 before dropping more than 4% to $90,999.30, according to Coin Metrics. Also, crypto-related equities felt the pressure, with Coinbase shares falling 6% and Microstrategy dropping 12%.
As Bitcoin approaches a $2 trillion market cap, large investors, such as pension funds and central banks, are starting to pay attention. Several analysts reveal that there is a lot of liquidity around the $100,000 mark, which may lead to more consolidation before any breakout. This according to them could cause a short squeeze if Bitcoin breaks above this level, potentially pushing prices higher.
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Matt Mena, a crypto research strategist at 21Shares, explained that the $100,000 level serves as a psychological selling point for investors who have held onto Bitcoin since its last bull run. He told Business Insider that token holders likely anticipated declines around the price point and chose to sell some holdings to lock in gains. The same behavior can be traced back to previous highs in bitcoin’s price, he said.
With Bitcoin’s recent record-breaking performance, reports reveal that it has prompted long-term holders to increasingly sell their assets in large amounts. The selling pressure has been offset to some extent by institutional inflows, including purchases by MicroStrategy and bitcoin exchange-traded funds (ETFs). However, ETFs experienced $438 million in outflows on Monday, ending a five-day streak of inflows.
Traders have been cashing in for a second conseçutive day following bitcoin’s post-election surge, fueled by optimism about President-elect Donald Trump’s pro-crypto policies.
While Bitcoin has lately been experiencing some form of pullback, currently trading at 93,965 at the time of writing this report, several analysts suggest that the price of BTC will hit the $100,000 price.
“Bitcoin has been on a tear since Election Day with very few pullbacks, but the $100,000 mark remains a formidable psychological barrier. While breaking through now would be a major bullish signal, a brief pullback may be needed to gather momentum before the next attempt”, Mati Greenspan, founder, and CEO of Quantum Economics, told CNBC by email.
Brett Reeves from BitGo explained that new all-time highs often lead to consolidation periods before the next price rally. “With new institutional money entering the space and rising retail activity via ETFs and exchanges, coupled with positive macroeconomic and regulatory developments, we may see a rapid recovery in price activity,” Reeves told CNBC.
Despite the recent pullback, bitcoin remains up over 30% since the U.S. election and has gained an impressive 114% year-to-date, signaling strong long-term momentum in the cryptocurrency market.