After reaching a record high of $108,000, Bitcoin’s price has sharply declined, leaving investors questioning the reasons behind this sudden drop. While the earlier surge brought excitement to the market, several factors are now contributing to the downward trend. Meanwhile, if Bitcoin fails to break above the resistance level, it could potentially drop further to $95,000.

Fed’s Interest Rate Decision 

One major reason for Bitcoin’s drop is the upcoming interest rate decision by the U.S. Federal Reserve. However, Coinpedia news reported that there’s a 96% chance that the Fed is expected to lower rates by 25 basis points, but concerns remain about how it plans to handle inflation moving forward. 

With inflation rising to 2.8% in November, Fed Chair Jerome Powell’s comments on the 2025 rate outlook are under scrutiny. If the Fed cuts lower rates in 2025 than expected, it could add immense pressure to the market.

Traders Cash In Their Profits

Another key factor is the wave of selling by short-term Bitcoin holders. Many traders who bought Bitcoin recently are now selling to secure their profits after the big rally. This kind of selling is common after prices reach new highs. 

However, long-term holders, who bought when Bitcoin was trading between $90,000 and $100,000, are mostly staying inactive, possibly waiting for more stable conditions before making any moves.

History Shows Corrections Are Normal

Bitcoin’s past price cycles show that corrections are a normal part of its growth. During previous all-time highs, Bitcoin often saw pullbacks of up to 34%. These short-term drops can wipe out weeks of gains but are considered a natural part of the market’s behavior. 

Analysts believe this correction might take Bitcoin below $100,000 temporarily before it stabilizes again.

Bitcoin To Drop $95K

As of now, bitcoin is trading around $104k marking a 2.93% decline over the past 24 hours. However, for Bitcoin to maintain its upward momentum, it needs to turn this new price peak into a solid support level. If successful, it could potentially push the price past the much-anticipated $110,000 mark.

However, if Bitcoin fails to break and hold above this resistance, the price could face a drop and Bitcoin might retreat toward its next key support level at $95,651.

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