Bitcoin and most altcoins have fallen this week even after Donald Trump’s inauguration to become the most crypto-friendly president in the US.
Bitcoin (BTC) price dropped to $101,000 on January 23rd, while popular meme coins like ai16z, Fartcoin, and Official Trump fell by over 20%. Other top laggards were coins like Lido DAO, Jupiter, Virtuals Protocol, and Hyperliquid.
There are four possible reasons for the ongoing crypto retreat. First, economists expect the Bank of Japan to hike interest rates by 0.25% on Friday. This would bring the official cash rate to 0.50%, the highest level since 2008.
The last BoJ rate hike occurred in August last year, leading to a sharp decline in cryptocurrencies and other assets. This was due to the unwinding of the Japanese yen carry trade. As such, another BoJ rate hike may trigger another drop, albeit at a smaller size.
Second, in line with this, Bitcoin and altcoins fell as traders waited for next week’s Federal Reserve interest rate decision. A hawkish tone may also lead to more weakness in the crypto industry since it would push government bond yields higher.
Third, they have dropped because Donald Trump has not mentioned crypto since his inauguration. He has also not signed any executive order on cryptocurrency. This explains why the odds of him creating a strategic Bitcoin reserve have dropped to 40% on Polymarket.
The coins also dropped because of the popular practice of buying an asset ahead of a major event and then selling it when it occurs.
Risks of a Bitcoin price double top
Bitcoin has also formed the risky double-top chart pattern at $108,100.This pattern is made up of two peaks and a neckline and is usually a bearish reversal sign. The neckline in this case is at $89,305. By measuring the distance between the double-top and the neckline, the potential target for the coin is about $74,000.
Therefore, Bitcoin will remain on edge as long as it is below that double-top pattern. This will, in turn, affect other altcoins that often move in the same direction as Bitcoin.
Moving above the double-top point at $108,100 will invalidate the bearish view and point to more gains, potentially to the psychological level at $110,000.
