This weekend saw Bitcoin’s price facing significant pressures, with a possibility of dropping deeper, potentially reaching $75,000 ahead of the Bank of Japan’s interest rate decision.
Summary
- The Bitcoin price may be on the brink of a major bearish breakout.
- The likelihood of a BoJ rate hike surged to 98% this week.
- Technical analysis indicates that the cryptocurrency could decrease further soon.
Bitcoin (BTC), the pioneering cryptocurrency, is currently stuck at the psychological barrier of $90,000. This price represents a drop of approximately 29% from its peak this year, highlighting its position within a significant bear market.
As investors brace for the impending Bank of Japan rate hike on December 19, the coin risks crashing this week. Data from Polymarket reveals a 98% chance of the bank increasing rates by 5 basis points to tackle persistent inflation.
The forthcoming BoJ rate hike is noteworthy for several reasons. First, it will affirm the bank’s independence, especially since the current prime minister, Sanae Takaichi, prefers maintaining low interest rates.
Secondly, this rate increase follows the Fed’s recent cut of 25 basis points, adjusting the benchmark policy to a range of 3.50% to 3.75%. The divergence between the Fed and BoJ typically causes the unwinding of decades-old carry trades.
Lastly, history indicates that Bitcoin’s price tends to drop by double digits following a BoJ rate hike. The steepest decline occurred last year when the bank raised rates for the first time in years.
In contrast, the Federal Reserve has signaled just one rate cut in 2026, which is much lower than analysts had predicted. Even with potential appointments sought by Trump for a new Fed Chair, other officials are likely to maintain a moderating influence. Three Fed officials dissented in the last meeting, a trend that may persist into next year.
Bitcoin Price Technical Analysis
Technical analysis suggests that Bitcoin has additional downside potential in the weeks ahead. It has already formed a death cross pattern on the daily chart.
Currently, Bitcoin is forming a bearish flag pattern, characterized by a vertical line and an ascending channel. Similar to the death cross, this pattern typically results in further declines.
Bitcoin’s price remains below both the Ichimoku cloud and the Supertrend indicators, signifying that bears are dominant. Therefore, the most probable outlook points to a continued decline, with an initial target set at the November low of $80,000.
A drop below this threshold could signal further declines to support at $74,500, the lowest level observed in April of this year.
