Bitcoin Price Pullback to $90K Possible But Healthy Fundamentals Persist

Bitcoin could potentially see a price pullback to around $90K, but current onchain metrics suggest strong long-term support. The year-over-year realised price reflects a healthy market, indicating BTC may be undervalued. Predictions from Standard Chartered suggest BTC could hit $120K by Q2 2025, driven by shifts in US asset allocation. Meanwhile, futures market dynamics hint at a potential long squeeze as Bitcoin trades around $94K.

Bitcoin’s recent performance is sparking discussions in the financial realm. The cryptocurrency closed the week near $94,000, which translates to a remarkable year-on-year return of about 53.61%. Since the last halving event in 2024, the market dynamics have notably shifted away from hype-fuelled speculation and towards a more mature bull trend fuelled by underlying onchain growth.

Axel Adler Jr., a researcher focusing on Bitcoin, highlights a key metric: Bitcoin’s year-on-year realised price has surged 61.82%. This figure represents the average price at which Bitcoin was last moved, indicating strong underlying support from long-term holders, as they appear to be raising the base price quicker than speculative price moves. This suggests a healthy market cycle that might lead to a bullish phase.

Additionally, there’s the Market Value to Realized Value (MVRV) ratio showing a drop of 8.98%, indicating that Bitcoin is currently undervalued compared to its fundamental price from a year ago. Historically, this scenario has often preceded significant price rallies, suggesting potential for Bitcoin to reach upwards of $110,000 if the demand ramps up.

The current state of Bitcoin’s realised price is also illustrative; it indicates a decline in speculative premium. Purchases made by investors in the past month are averaging about 5% below the cost basis for those who held coins for six months. This resembles earlier accumulation phases and hints at a market ready to gain momentum in the near weeks.

Forecasts from Standard Chartered offer an optimistic view, suggesting that Bitcoin could touch $120,000 by the second quarter of 2025. Geoffrey Kendrick from the bank indicates this bullish sentiment is influenced by moves into non-US assets amidst the high US Treasury term premium, particularly following economic shifts triggered by trade tensions under Donald Trump.

However, in the futures market, a potential long squeeze is brewing as traders stack up on long positions, pushing for Bitcoin price increases above $90,000. Recently, Bitcoin’s funding rate has flipped positive; this occurred after a brief period of being negative which created chatter about potential price crashes towards $97,000. The reality remains that if Bitcoin continues to face selling pressure, we might see it dip to around $90,500.

Recent trading activity shows a 1.58% price drop after the New York market opened on April 28. Analysts are monitoring the bearish divergence noted with Bitcoin’s relative strength index (RSI) after it struggled to maintain above the $95,000 mark. This raises concerns about re-testing lower price points between $90,500 and $88,750 in the days ahead.

Ultimately, while excitement around Bitcoin continues, it’s essential to acknowledge that every move in investment carries inherent risks. Future performance remains uncertain, and thorough research should guide any trading decisions made.