Bitcoin Drops 1.2% to $94,195 Amid Bearish Sentiment

Bitcoin (BTC) is currently facing a short-term bearish outlook, with its price dropping about 1.2 percent in the last 24 hours to trade at approximately $94,195 during the mid-North American trading session on Monday, May 5. This decline comes after the total crypto market cap slipped 3 percent to about $3.04 trillion in the past 24 hours, with Bitcoin teasing below $94k earlier on Monday. The bearish sentiment is further supported by the fact that Bitcoin closed last week in an inverted hammer candlestick, indicating a potential reversal in the short term.

Despite the short-term bearish outlook, midterm expectations for BTC price remain bullish. Since April 9, when U.S. President Donald Trump posted it was a great opportunity to buy, Bitcoin price has gained over 18 percent to date. However, the bullish momentum has significantly declined after the BTC price retested the resistance/support level around $96.5k. In the two-hour timeframe, the BTC price has broken down from the recently established rising logarithmic trendline, with the MACD line having crossed below the zero line, further supporting the short-term bearish outlook. As a result, BTC’s price is well positioned to retest the support level around $91k before rallying towards $100k in the near future.

Ask Aime: What will happen to Bitcoin next week after dropping below $96k?

Analysts have identified the $91,200 level as crucial for maintaining Bitcoin's upward momentum. If this level holds, it could pave the way for a continued rise towards the psychologically significant $100,000 mark. The short-term holder cost basis of Bitcoin stands at nearly $93,460. Maintaining above this level could push BTC towards higher prices. Additionally, the relative strength index (RSI) remains in the green, indicating that buyers are still in command despite recent pullbacks. The network usage of Bitcoin has also been high, with the highest number of active addresses in six months, further corroborating the bullish case for the cryptocurrency.

However, there are potential challenges ahead. Analysts have highlighted that the $93,000 to $100,000 range is a dense zone filled with prior investor cost bases, which could create resistance as many holders might be waiting to sell once prices return to their original buying levels. This psychological barrier could slow momentum just as excitement peaks. Despite these challenges, the path beyond $100,000 is described as "blue skies," implying that a clean breakout could fuel a strong rally. The supply of Bitcoin drops off sharply beyond this level, suggesting lighter resistance ahead. If Bitcoin can maintain support above $91,200 and push through the resistance at $100,000, it may determine the shape of the market in the weeks ahead.

The current dynamics of the Bitcoin market present a sound equilibrium, with most holders either in profit or at breakeven. This indicates a strong bullish accumulation and minimal panic selling. The majority of holders being either in profit or at breakeven shows healthy market sentiment. On the contrary, this small fraction of holders who are at a loss may temporarily sell, which would provide liquidity. They may also consider waiting in hope for the prices to bounce back. Many times in history, periods of consolidation with few underwater holders lead to upward momentum due to decreased selling pressure and new buyers entering the market. Hence, a buy opportunity exists for those willing to take the risk.

Institutional interest in Bitcoin continues to rise, with firms like Strategy making significant purchases. The company's aggressive Bitcoin acquisition has attracted substantial market attention and has been described as creating an artificial halving event due to the daily purchases exceeding the daily mined supply. This increased demand for BTC pushes its price to rise and even attracts more investors to the market. Strategy seeks to strengthen its role in the market amid increased institutional interest in Bitcoin. The company's ambitious BTC accumulation could continue to drive Bitcoin's price movements as the BTC price approaches $100,000.