Bitcoin May Dip Further, Yet Bullish Signals Emerging for Future Surge

"I wouldn't even be in this predicament if it weren't for you. You brought down so much f---ing heat on me." - Robert De Niro as Ace Rothstein to Joe Pesci's Nicky Santoro in Martin Scorsese's Casino.

Supporters of Bitcoin might find it tempting to hold the wider crypto market responsible for the bearish trend that caused the price of BTC to drop by over 20% from its all-time high above $109,000 just five weeks ago, reaching as low as $87,000 earlier on Tuesday.

Bitcoin reached its peak a day before the presidential inauguration amidst a speculative craze in memecoins, which reached its climax when the Trump team considered it wise to launch tokens linked to the incoming president and first lady. Initially, these tokens soared before quickly plummeting and leaving almost everyone, except insiders, with substantial losses.

SOL, the native token of the Solana blockchain on which many of the memecoins were created, has plunged by more than 50% since then, leading the decline in major cryptocurrencies since that January weekend.

Bitcoin enthusiasts were anticipating a Strategic Bitcoin Reserve but instead received TRUMP and MELANIA.

Despite the wipeout in memecoins and the ensuing chaos in the broader crypto market over the past few weeks, bitcoin managed to mostly stay within a narrow range, not far from its record. As recently as 96 hours ago, the world's largest cryptocurrency was ascending and appeared poised to reclaim the $100,000 level.

Then, the Bybit hack occurred.

Although Bitcoin supporters were quick to highlight that the exploit had nothing to do with Bitcoin and instead demonstrated the inherent weaknesses in Ethereum's technology, the decline in ETH (down 15% and counting since) and the rest of the crypto market affected BTC.

Read More: "Binance refutes allegations of selling off ETH and SOL"

"Our expectations for this cycle are much higher than $108,000, so we tell ourselves we couldn't possibly have peaked already," wrote self-proclaimed permabull StackHodler on X Tuesday. "We have to go higher in 2025, right?" he continued. "The truth is, nobody knows for sure. We just went through the short term holder realized price of $92,000 ... We may need to revisit the 200 day moving average around $82,000."

"DO NOT buy the dip yet, a move to the low $80s is on," wrote Standard Chartered's Geoff Kendrick, who previously forecasted $200,000 BTC by year-end. "Before buying the dip is attractive I think we get a $1B ETF outflow day (current worst ever day -$583M)."

Although not impacted as severely as crypto, conventional markets have also been faltering. As measured by the S&P 500 Index, U.S. stocks last week experienced their worst week since the Trump inauguration. The tech-heavy Nasdaq peaked in December and is currently 5% below that level.

Choose your justification: Tariffs, DOGE (not the token, the Musk-led government cost-cutting regime), or simply a cooling-off of previously very lively animal spirits, but rate markets have taken notice.

The U.S. 10-year Treasury yield has retreated all the way back to 4.32% from 4.80% just before Trump took office. Moreover, expectations for more relaxed Federal Monetary policy have surged. According to CME FedWatch, the likelihood of a May rate cut has more than doubled to 30% over the past week, and the chances of two rate cuts by June have more than tripled to 15%.

"Lower U.S. Treasury yields are a significant longer-term positive for BTC," concluded Kendrick.

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