Bitcoin Decreased to $122,000: What Will Happen in the Crypto Market?

Bitcoin, rapidly declining by 3% above its historical peaks at over $126,000 to drop to $122,000. This pullback caused major altcoins like XRP, Dogecoin (DOGE), and Cardano (ADA) to experience losses of around 4-5%. Analysts point out that many indicators suggest that the crypto rally is overheating in the short term.

K33 analyst emphasized that Bitcoin inflows and derivative product trading volumes reached their highest levels of the year last week, creating the ground for a potential shakeout. Bitcoin fell below $122,000 with a 2.4% loss within 24 hours, giving back the gains it had achieved in the last three days.

Following this pause in the crypto rally, the declines of 5-7% in assets such as XRP, Dogecoin, Cardano, and Avalanche (AVAX) drew attention. Starting the year with a 31% increase, Bitcoin has offered very few opportunities for investors to celebrate. Peak levels were generally met with sharp sell-offs.

For example, the initial surge to $109,000 before Donald Trump's inauguration fell to $100,000 and then to $75,000 within three months. After surpassing $123,000 in July, Bitcoin then experienced a 10% drop. In mid-August, after surpassing $120,000, a 15% crash occurred again.

This latest decline followed Bitcoin's rapid rise of 16% from the low levels of $109,000 at the end of September. Jean-David Péquignot, CCO of the Deribit options market, predicted that Bitcoin would return to the $118,000-$120,000 range, suggesting that this level could shake out investors who entered at lower prices. If this pullback happens, he stated that the technical data and macro environment would support Bitcoin exceeding $130,000 in the final quarter of the year.

K33 research director Vetle Lunde pointed out that the derivatives market and ETF inflows are also overheating. He revealed that last week represented the strongest Bitcoin accumulation of the year, with a total of 63,083 Bitcoins (approximately $770 million worth) added through U.S. ETFs, Chicago Mercantile Exchange, and perpetual futures. This increase stemmed from widespread long positions betting on higher prices, setting the stage for a reversal.

Fed (Federal Reserve) Board Member Stephen Miran highlighted the changing long-term economic forces while evaluating the central bank's flexibility in cutting interest rates. He expressed his expectation for an increase in growth rates with clearer policy signals during this period of weak monthly economic growth expectations.

The widespread decline in cryptocurrency asset prices also negatively affected companies operating in this field. Stocks such as MicroStrategy (-7%) and Coinbase (-4%) experienced losses. Companies like Bitmine Immersion (-3%), which has an Ethereum wallet, and Sharplink Gaming (-7%) also saw declines. Bitcoin miners mostly recorded losses; MARA Holdings fell by 4%, Riot Platforms by 3%, and Hut 8 by 2%.