Bitcoin below $100K: Consolidation or signal of a deeper decline

Bitcoin Below $100K: Consolidation or Signal of a Deeper Decline?

Bitcoin abandons early hopes for an immediate recovery as the crypto asset continued to fall on February 5th after a volatile weekly opening, where the daily highs and lows differed by nearly $11,000. The daily BTC bar closed below $100,000 for the second time since January 15th, with markets expecting a consolidation period over the next few days. After the massive liquidation event, a cooling-off period was expected so investors could reset their positions and reconsider whether further declines are ahead.

The situation may have already changed as tariffs began to have an effect, especially on China. China has several options: to devalue the currency again to continue supplying products to the U.S. and essentially eliminate the entire tariff issue, or to stop focusing on the U.S. and start concentrating on the domestic market to grow and become stronger, which has disappeared in recent years due to their policies.

The second option is more likely, and this will automatically lead to the fact that China wants to sell its dollars, buy back its own currency, and begin strengthening its currency to become solvent again. This also changes the dynamics in the government bond and currency markets, and when this happens, it is the key stimulus for altcoins to start moving, as they have a strong correlation with a weaker dollar and rising yields.

How Do Bitcoin Declines Compare?

Despite the current market uncertainty, the price of Bitcoin remains ~11% below its all-time high of $109,026. This is a modest decline for a volatile asset that has increased by 131% in just over a year. From a market trend perspective, it’s crucial to determine the threshold at which a decline moves from a routine correction to a significant crash or collapse. Over the last three bull cycles, the average drop of BTC has gradually decreased. During the 2016-2017 cycle, the average correction was -38%, while during the 2020-2021 bull market, it dropped further to -23.25%.

What Is the Maximum Bitcoin Correction for 2024-2025?

In 2024-2025, the maximum BTC drop was 26%, occurring within six months – from March to August 2024. The average drop for the period 2024-2025 is just 12%, and in 2025, it’s 8.9%. Therefore, none of the corrections after August 2024 can be considered a crash, as most corrections were lower than the average drop over the last six months.

Will Bitcoin Price Drop to $90,000?

After failing to close a daily candle above $105,000, Bitcoin’s market structure begins to resemble the consolidation phase from March 2024. Over six months, BTC formed a pattern of lower highs and lower lows, with the price falling from a high of $73,881 to a low of $49,000. However, the lowest daily candle closed around $54,839.

The worst-case scenario for Bitcoin, which doesn’t change the current average declines, is a drop to $81,500 from the current all-time high, representing exactly 26%. Meanwhile, a correction to $90,000 is approximately 14% – about 60% of the largest decline in the current cycle. Therefore, there’s a chance that BTC will test the $90,000 level again over the next few weeks, considering the market structure is becoming bearish in the short term.