Bitcoin Price May Fall To $85,000? Analyst Explains Why

Key Insights

• BOJ-induced uncertainty could fuel a bearish Bitcoin price trend this week.
• Why the upcoming BOJ rate hike may be priced in and why the downside could be minimal.
• Bitcoin liquidation profile: Here’s a look at the potential pain points according to exchange liquidation data.

Bitcoin market sentiment descended deeper into gear and greed sentiment this weekend. The upcoming interest rate decision by the Bank of Japan was the primary factor behind that outcome.

The markets have been over the edge, with numerous investors predicting potential market contagion if the BOJ raises rates.

Analyst Michaël van de Poppe believes that Bitcoin price will likely embark on a significant downturn and a sizable liquidity sweep this week.

Bitcoin price already embarked on a sizable retracement from north of $94,000 on Wednesday to $88,749 at press time.

This bearish outcome suggests that investors were already exiting their positions in anticipation of the upcoming disruption.

The fact that the BOJ has been making headlines for the better part of the last 2 weeks raises questions regarding the potential impact.

Bitcoin Price Impact Could be Limited if Investors Price in the BOJ interest rate disruption

The currently declining Bitcoin price tag suggests that a potential BOJ rate hike might be priced in. This latest BTC price drop may signal that investors were already acting ahead of the main event.

Moreover, the king of cryptocurrencies has already been heavily discounted in Q4. Its current price level was almost down by 30% compared to its highest price point in October this year.

Long-term holders and smart money have been exiting their BTC positions over the last few months. This means the potential downside may not be as severe.

Although Van De Poppe anticipates a bearish outcome this coming week, it was worth noting that whales anticipated a different outcome.

Their net flows were positive by more than %6 million this week, which may not be much in the grand scheme of things.

However, they executed just over $1 billion in longs on OKX and Binance Futures. This suggests a short-term bullish expectation.

Moreover, BTC price sat on a short-term ascending support at press time, suggesting a potential pivot to the upside was highly probable.

A break below the short-term ascending support may trigger a bearish cascade.

If this outcome takes place, then BTC price could slide towards the $85,000 price level, with a possible crash towards the $75,000 support.

Bitcoin Liquidation Profile Highlights Maximum Pain Points

The level of Bitcoin open interest remained relatively low. This is because of the relatively high levels of market uncertainty, combined with the anticipation that the BOJ will cut rates.

Despite these observations, the market still highlighted a significant appetite for derivatives. Chances are that liquidations could be elevated this week, driven by higher anticipated volatility.

The Bitcoin exchange liquidation map revealed heavier bearish expectations compared to bullish expectations.

BTC had its highest cumulative short liquidation at $91,000, with about $628 million worth of short positions at risk.

On the other side of the spectrum, Bitcoin’s highest cumulative long liquidation leverage was concentrated near the $88,340 price level, with roughly $262 million in potential long liquidations.

The cumulative long liquidation leverage near the $80,000 was roughly $887 million. Cumulative short liquidation leverage at the $95,000 price level was about $1.28 billion.