• Bitcoin’s short-term direction hinges on central bank decisions, with BOJ rate risks and a possible Fed hold creating real downside pressure toward $80,000.
• MicroStrategy’s potential need to sell Bitcoin, combined with weak market sentiment and broader risk-off conditions, amplifies near-term volatility.
• Long-term fundamentals remain intact as Bitcoin’s supply cap and inflation-hedge narrative continue to attract institutional interest despite macro uncertainty.

Bitcoin price has dropped by more than 25% from its all-time high in November. Although it has started recovering today, with the price hovering above $91,000, macroeconomic factors continue to play a major role. 

So, the question is, is there a risk of BTC failing to breach $100,000 and falling below $80,000?

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Japan Slowed The Bitcoin Recovery

The Bank of Japan has rattled financial markets by suggesting it may raise interest rates, which can threaten the Japanese Yen carry trade, which has been a source of low-rate money borrowing for decades. 

Concerns about an economic slowdown and the Federal Reserve holding rates steady instead of cutting them have also displeased investors.

Bitcoin briefly fell below $85,000 before rallying the following day, but the past few months have been filled with rallies that sputtered a few days later.

MicroStrategy Might Have To Sell Some Of Its Bitcoin

MicroStrategy CEO Phone Le’s recent admission that the company may sell Bitcoin if shares trade below the value of its underlying holdings is a key headwind that can push Bitcoin below $80,000.  

Strategy isn’t just another Bitcoin player. The company has been a Bitcoin treasury since 2020, and owns approximately 3% of all Bitcoin. Its stock is also doing poorly in recent months, which makes Le’s scenario more possible. 

Strategy has lost roughly 60% of its value since mid-July. Meanwhile, Bitcoin has only dropped by 25% during the same stretch.

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Recent price action suggests that some crypto traders are trying to beat Strategy to the punch. 

Market Sentiment Is Changing

While Strategy selling some of its Bitcoin can hurt confidence in the asset and result in more sellers, the downturn isn’t isolated to Bitcoin, which is down by 19% over the past 30 days. 

Ethereum has actually performed worse despite having zero connection to Strategy, and it’s down by 25% over the past month.

The next two weeks will be critical for market sentiment. The Fed meets on December 9-10 to decide if it will lower rates one more time, while the Bank of Japan meets on December 18-19. 

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Financial markets and crypto can go much lower if the Fed doesn’t cut rates and the Bank of Japan raises its rate. 

A drop below $80,000 for Bitcoin price is very likely if those two things happen. However, investors may see a strong rally if the Fed cuts rates and the Bank of Japan keeps its rate steady.

Higher interest rates can lead to more margin calls and prompt over-leveraged institutions and investors to sell off more assets. 

The Japanese Yen carry trade’s unwinding is perhaps the biggest factor that can impact Bitcoin prices and financial markets as a whole.

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Bitcoin’s Inflation Hedging Can Propel It To All-Time Highs

Sentiment isn’t good for Bitcoin price right now, but its value as a digital asset remains intact. 

As countries get deeper into debt and reduce the purchasing power of their fiat currencies, Bitcoin’s status as a decentralized currency can propel it to all-time highs.

There are only 21 million Bitcoins, and no central authority can increase the supply of Bitcoin, giving it a similar investment thesis as gold. Bitcoin’s volatility makes it easy for investors to abandon ship, especially during market cycles like this one. 

Nothing about Bitcoin’s long-term value has changed, but central banking decisions may push it below $80,000 in the short term. 

Investors who prefer to stay in the market rather than time the market may opt to buy the dip. 

Financial institutions have started to heavily invest in Bitcoin, and while the potential unraveling of the Japanese Yen carry trade can cause short-term disruption, it doesn’t impact Bitcoin’s long-term investment thesis.

Disclaimer