Bitcoin, the titan of the cryptocurrency world with a market capitalization hovering around $1.9 trillion, has experienced a significant downturn, falling below the psychological threshold of $100,000. This lightning-fast drop, which occurred in just three days, has left many investors and analysts wondering whether it marks the end of the current bull market or whether it signals a fit correction in an ongoing bull trend.

Short-lived deterioration or trend reversal?

The price action was particularly noticeable this week as Bitcoin broke through the $100,000 support level, which has remained high for eight consecutive days. Market analysts point to several factors influencing this decline. A significant influence is the market makers’ strategy of raising the price to encourage traders to open long positions at around $98,000, thereby increasing liquidity.

Once this liquidity was exhausted, market makers strategically used Federal Reserve Chairman Jerome Powell’s speech as a catalyst to trigger a downward price movement, effectively filling the price inefficiencies at $93,744 (50%) and $90,513 (100%).

The analysts explained: “Bitcoin’s decline was necessary because there were inefficiencies below the price to be filled, which is $93,744 for 50% and $90,513 for 100%. The inefficiency rule states that traders must fill either 50% or 100% of the inefficiency.”

They added that market makers “intentionally pushed the price higher to induce traders to open long positions, thereby increasing liquidity to $98,000. Exhausted market makers decided to liquidate at the $98,800 level and used Powell’s speech as a catalyst to fuel a bearish move.”

Experts are currently predicting a rebound to $101,000 before retracing or continuing the trend as the $93,788-$92,200 range currently provides solid support. There have been significant buy orders in this zone, corresponding to the recently filled 50% inefficiency. A rebound from this level seems inevitable.

BlackRock and Institutionals Escalate Confidence in Bitcoin Signal

Amid this volatility, BlackRock, one of the world’s leading asset management firms, has made headlines for its significant investments in Bitcoin. According to Arkham Intelligence’s insights, BlackRock not only net bought Bitcoin while other ETFs were selling, but also amassed a significant amount, currently holding $122,600. BTC. This makes BlackRock the 11th largest holder of Bitcoin, controlling approximately 0.6% of the circulating supply.

Their aggressive accumulation, including a recent $1.5 billion purchase, contrasts sharply with BTC net sales in the broader market this week of $785 million. BlackRock’s actions sparked discussions on platforms like X, with many people applauding or humorously noting their shift from time-honored assets to digital currencies.

Additionally, BlackRock’s commitment to the cryptocurrency market was highlighted by their BUIDL fund receiving a $100 million USDC fund, signaling a strategic shift towards digital assets. Such a finance person could interpret this move as a vote of confidence in the long-term viability of cryptocurrencies, potentially influencing market sentiment and dynamics.

Market sentiment: fear or opportunity?

Current market sentiment, as measured by the Fear and Greed Index, remains in the “greed” zone at 62, indicating a minimal level of fear among investors. Instead, a drop below $100,000 is seen by many as a buying opportunity, anticipating an imminent recovery. Analysts are forecasting a rebound back to around $101,000 before any significant reversal or continuation of the current trend, supported by solid buying in the $93,788-$92,200 range, representing the recently filled 50% inefficiency level.

Featured image from iStock, chart from Tradingview.com