3 Reasons Bitcoin’s Price Might Drop Below $100,000

Macroeconomic concerns, reduced Bitcoin miner earnings, and growing caution among investors could lead to a significant decline in Bitcoin's price.

Key Insights:

• Despite favorable macro trends, Bitcoin derivatives show signs of waning investor confidence in sustaining the recent price surge.
  
• The pivot by Bit Digital to Ether raises concerns that other miners might start liquidating their Bitcoin reserves.
  
• Bitcoin’s price dropped below $100,000 earlier this week, with concerns over global tensions and market sentiment causing uncertainty.

On Monday, Bitcoin fell below $100,000 after reports of attacks on U.S. military bases in Qatar by Iran. While the price recovered to $108,000 by midweek, investor sentiment has become more cautious, particularly in the derivatives market. Bitcoin futures funding rates recently hit a seven-week low, highlighting growing apprehension about further price gains.

The recent global trade tensions, especially those triggered by the U.S. in April, are adding to investor unease. Though temporary agreements have been made, some are nearing their expiration, including the deal with the Eurozone, set to end on July 9. The unpredictability of U.S. trade policies under President Trump has raised concerns that the conflict could escalate further.

Adding to the worries, U.S. GDP shrank by 0.5% in Q1, mainly due to an expanding trade deficit. Despite this, small-cap stocks in the U.S. have shown resilience, while Bitcoin has remained well below the $112,000 mark. Investors’ caution around Bitcoin stems from concerns about inflated valuations driven by hype around artificial intelligence, which has affected Bitcoin’s price ceiling.

Another risk to Bitcoin’s price comes from growing corporate interest in holding Bitcoin. Bit Digital, a New York-based Bitcoin miner, recently announced it would divest from its Bitcoin mining operations to buy Ether instead. This move, alongside a report indicating that Bitcoin mining profits have fallen to a two-month low, has sparked fears that other miners might follow suit and sell their Bitcoin holdings.

While macroeconomic factors still support Bitcoin’s potential for long-term growth, especially if central banks adopt looser monetary policies, there’s a real possibility of a short-term price correction. A drop below $100,000 could happen if market uncertainty continues.