Bitcoin Faces 12% Drop Risk, Analysts Predict

Bitcoin, the world's leading cryptocurrency, is facing potential downside risks as analysts predict a retracement to levels last seen during the U.S. elections in November. The cryptocurrency could extend its losses to around $72,000, according to projections by Greg Madagini, Director at a crypto options analytics platform. This prediction is based on a technical pattern known as the Bart Simpson pattern, which suggests a sharp rise followed by consolidation and a subsequent sharp retrace.

Madagini's analysis indicates that if this pattern holds, Bitcoin could revisit its November election levels, similar to the retracement observed in U.S. equities. This bearish outlook is further supported by renowned technical analyst Peter Brandt, who argues that Bitcoin has structurally topped out and needs to reclaim $95,000 to turn market sentiment positive again.

The potential dip in Bitcoin's price is also influenced by renewed fears of a U.S. recession. However, Cathie Wood, CEO of Ark Invest, offers a more optimistic view. She projects that the U.S. economy will experience a 'deflationary boom' in the second half of 2025, which could provide a positive environment for Bitcoin and other assets.

Another factor supporting a potential recovery for Bitcoin is its strong correlation with the global money supply (M2). Analysts have noted that Bitcoin tends to lag behind global M2, and the recent drawdown in Bitcoin's price mirrored the drop in M2 last quarter. With the indicator surging in the first quarter of 2025, there is a possibility that Bitcoin could bounce back if the correlation holds.

Jon Consorti, head of growth at a Bitcoin-focused company, also points to the Bitcoin fear and greed index, which is currently at typical 'bottom' levels. This index has historically indicated that Bitcoin is primed for a recovery when it reaches such levels during bull markets.

At the time of reporting, Bitcoin was valued at $81,600 after a brief dip to $76,000. This level is also a 50 Exponential Moving Average (EMA) on a weekly chart and has been crucial support for past bull markets. It remains to be seen whether this support level will hold in the short term.