Bitcoin Drops 2% as Macro Factors Weigh on Investor Sentiment

Bitcoin (BTC) concluded the week with a nearly 2% decline, struggling to surpass the $85,000 mark. The cryptocurrency dipped below $80,000 earlier in the week, reaching a low of $76,985 before rebounding to retake $85,000 on Friday. However, it has since declined to its current level. Over the past 24 hours, BTC has experienced marginal losses as macroeconomic factors weigh on investor sentiment.

A new House bill introduced by Rep. Byron Donalds aims to establish a Strategic Bitcoin Reserve, aligning with President Donald Trump’s executive order. Unlike previous legislation, this bill does not mandate the government to purchase Bitcoin but instead focuses on codifying the strategic reserve and digital asset stockpile using seized assets from criminal and civil proceedings. The bill authorizes the Treasury and Commerce Secretaries to find budget-neutral ways of acquiring Bitcoin and other assets, providing a less contentious path to implementing the reserve.

Bitcoin's struggle to break above the $84,000-$85,000 level has raised questions about the longevity of the current bull run. The cryptocurrency is down over 10% year-to-date, and analysts have noted that BTC is beginning to break below a critical support level that has held strong for over a decade. If this trend continues, it could signal the end of the current bull market. The underperformance is evident in significantly lower capital inflows into Bitcoin exchange-traded funds, with spot Bitcoin ETFs experiencing net outflows year-to-date. Additionally, the crypto market cap has declined by over $600 billion since the beginning of the year, further casting doubt on the bull market's sustainability.

Despite the current challenges, Fundstrat co-founder and managing partner Tom Lee remains optimistic about Bitcoin’s price trajectory. Lee believes that Trump’s economic policies, though disruptive in the short term, will have a positive structural impact. He also highlighted tangible drivers of productivity at play, reaffirming his belief that BTC will be the top-performing asset in 2025. Lee stated, "Bitcoin is still our favorite idea for this year. So we think it’ll be the best-performing asset class, even better than gold."

Analysts remain hopeful that Bitcoin can retrace its way back to $100,000, with a reversal likely in the near future. Potential levels for BTC to hit when it pivots toward $100,000 include $91,700, $102,700, and $109,356, with the latter marking a new all-time high for the asset. However, the price action over the past week has been volatile, with BTC experiencing significant fluctuations. Buyers attempted a recovery on Monday, but the momentum was lost, leading to a decline below $80,000. The price has since recovered but remains below the 200-day SMA, indicating bearish sentiment. If BTC continues to decline and slips below $80,000, it could drop towards $75,000. On the other hand, buyers will look to retake control and push the price back above the moving averages and the $90,000 price level. The MACD has turned bearish, indicating a potential uptick in the near term. However, BTC has seen a substantial fall during the current session, with the price dipping below $83,000.