Bitcoin Volatility Sparks Market Concerns Amid $90,000 Support Test

NEW YORK — Bitcoin experienced a dramatic reversal this week, climbing above $99,000 on Wednesday after briefly dipping below $90,000 earlier in the week. The cryptocurrency’s volatility has raised concerns among analysts, with Standard Chartered‘s Geoff Kendrick warning that a sustained drop below $90,000 could trigger panic selling and further declines.

“A clean break below $90,000 (beyond the temporary dip seen on Jan. 13) could see bitcoin break to the low $80,000s, driving a further 10% decline in digital assets across the board,” Kendrick wrote in a research note. He added that such a retracement could create buying opportunities, stating, “Once such a retracement runs its course, we would recommend accumulating longs again.”

Kendrick highlighted that 14% of bitcoin holdings are currently at a loss, with most recent sales occurring below purchase prices. Additionally, bitcoin ETFs and MicroStrategy‘s spot purchases, made after the U.S. presidential election, are only now breaking even. Average buy prices for ETFs and MicroStrategy stand at $94,000 and $93,000, respectively.

The analyst warned of a potential “self-fulfilling sell-off” if bitcoin drops toward $80,000, which could trigger record daily outflows exceeding $1 billion from bitcoin ETFs. The current record, set on Jan. 8, saw $583 million in outflows.

Bitcoin’s recent struggles follow a post-election rally that lost momentum in late 2024 after Federal Reserve Chair Jerome Powell issued an inflation warning on Dec. 18. Last week, a spike in bond yields further pressured the cryptocurrency, as investors shifted away from growth-oriented risk assets.

Despite the volatility, bitcoin rebounded above $96,000 on Tuesday following a favorable inflation report and climbed to $99,000 on Wednesday after another encouraging economic update. Kendrick remains optimistic about bitcoin’s long-term prospects, reiterating his prediction that the cryptocurrency could reach $200,000 this year as institutional inflows resume under the incoming pro-crypto administration.