The price of Bitcoin has dropped to the $88,000 range on Friday, experiencing a decline of over 4% in the last 24 hours. Currently, it is trading close to its seven-day low of $88,091, which is approximately 4% lower than its seven-day high of $92,805.
Bitcoin’s global market capitalization is now at $1.77 trillion, supported by a 24-hour trading volume of $48 billion.
Despite the current decline, Wall Street firm JPMorgan remains optimistic about Bitcoin’s long-term value. The bank is maintaining its target price for Bitcoin, which is linked to gold volatility, at $170,000 for the next six to twelve months.
Analysts suggest that this model takes into account both price variations and mining costs.
A significant player in the market is Strategy (MSTR), the largest corporate holder of Bitcoin, with a total of 650,000 BTC. Its enterprise-value-to-Bitcoin-holdings ratio, known as mNAV, currently sits at 1.13.
According to JPMorgan analysts, this is seen as “promising.” A ratio higher than 1.0 suggests that Strategy will likely avoid forced Bitcoin sales.
Strategy has also created a cash reserve of $1.44 billion in U.S. dollars. This reserve is intended to cover dividend payments and interest obligations for at least the next 12 months, with plans to extend it to 24 months.
Challenges in Bitcoin Mining
Mining pressures are persistently impacting Bitcoin’s performance. Both the network’s hashrate and mining difficulty have declined. High-cost miners outside of China are scaling back due to increasing electricity prices and falling Bitcoin prices. Many have liquidated some of their holdings to maintain liquidity.
JPMorgan now estimates the production cost for Bitcoin at $90,000, down from $94,000 the previous month. While decreasing hashrates can lower production costs, the immediate effect is continued selling pressure from miners.
Institutional investors are exhibiting caution as well. BlackRockâs iShares Bitcoin Trust, or IBIT, has experienced six consecutive weeks of net outflows, with more than $2.8 billion withdrawn from the ETF during this time, according to Bloomberg.
These withdrawals indicate a reduced appetite from traditional investors, even as Bitcoin prices begin to level out. Analysts point out that this trend marks a notable shift from the steady inflows observed earlier this year.
The overall market is still in recovery mode following the liquidation event on October 10, which erased over $1 trillion in crypto market value and pushed Bitcoin into a bear market.
While Bitcoin has regained some value this week, momentum remains tenuous.
Currently, JPMorgan analysts suggest that Bitcoin’s forthcoming major movements are less influenced by miner activity. Instead, they depend on Strategy’s capability to hold its Bitcoin assets without selling. The mNAV ratio and the reserve fund instill confidence that the company can endure market fluctuations.
Additional potential catalysts could also emerge. The MSCI index decision on January 15 may impact Strategyâs stock and subsequently Bitcoinâs valuation. Analysts assert that a favorable outcome could initiate a significant rally.
Last week, Michael Saylor of Strategy addressed MSCI index disputes, clarifying that Strategy operates as a publicly traded company with a $500 million software business and a treasury strategy utilizing Bitcoin, and is not merely a fund, trust, or holding company.
He also highlighted recent activities, which include five digital credit security offerings with a total notional value exceeding $7.7 billion.
Bitcoin Price Insights
Analysts at Bitcoin Magazine contend that the correlation between Bitcoin price and gold has recently strengthened, particularly during market downturns, providing a clearer perspective on its purchasing power when assessed against gold rather than USD.
The breach below the 350-day moving average (approximately $100,000) and the psychological threshold of $100K indicated an entry into a bear market, resulting in a swift 20% decline.
While charts in USD indicate a peak for 2025, Bitcoin’s valuation in terms of gold hit its peak in December 2024 and has since dropped over 50%, suggesting the possibility of an extended bear market.
Historical gold-centered bear cycles suggest that support zones may be nearing, with the current declines standing at 51% over 350 days reflecting institutional adoption and supply limitations rather than shifts in the cycle.
At present, the Bitcoin price lingers around $88,000.
