Bitcoin falls for the third time this month: breaks the $100.000 support level

Bitcoin fell below $100.000 for the third time this month, dragged down by massive sell-offs, uncertainty in Washington about the Fed and the institutional exodus from ETFs.

Bitcoin's price fell back below the key psychological level of $100.000 on Thursday, marking the third time this month that the cryptocurrency has failed to hold that support. The price reached a low of $96.071 This Friday, consolidating a correction that began the previous day, when the price had already fallen sharply from $103.300.

The recent drop in the price of Bitcoin is, for many, the result of a confluence of factors, ranging from a cascade of internal liquidations to a notable outflow of institutional funds from spot ETFs and, above all, an environment of high macroeconomic uncertainty in the United States.

As Bitcoin's price fell, traditional risk markets also showed similar behavior. The interest rate-sensitive Nasdaq technology index dropped 2,45% on Thursday, and the S&P 500 fell 1,56%. According to experts, this widespread movement suggests a flight by investors to assets considered safer.

Following the federal reopening, uncertainty continues to hold back the crypto market

Donald Trump has ended the partial government shutdown after sign the law approved by Congress with 222 votes in favor and 209 against. This agreement guarantees funding for most federal agencies until midnight on January 30 of next year. With this measure, Federal agencies in the United States are gradually reopening and resuming operations After facing the longest government shutdown in history, the damage resulting from the uncertainty caused by this shutdown is still deeply felt.

The main source of this uncertainty comes from Washington. Although the government is resuming operations, the negative economic impact has already been felt and is difficult to reverse. The shutdown created a "black hole in the flow of federal data," according to Nic Puckrin, an analyst at The Coin Bureau. One example was the delay in the release of the October Consumer Price Index (CPI), a key indicator of inflation, which was not published on time.

This lack of essential data has limited the Federal Reserve's (Fed) ability to make flexible monetary policy decisions. Fed Chairman Jerome Powell has indicated that There are no guarantees that further interest rate cuts will be announced. before the end of the year. This contrasts with the expectations of major players in the crypto industry, such as BlackRock, who anticipated further rate cuts. Before the close, the market considered a December rate cut highly likely, but now that probability has fallen “drastically,” according to Puckrin.

At the Fed's last meeting in October, when Powell explained this situation, the institution implemented a quarter-point rate cut to mitigate the impact of the shutdown on the labor market. However, Powell warned that the "fog" created by the lack of data makes it unrealistic to expect further cuts this year. 

At the time, Bitcoin was trading near $109.000, and Powell's words began to dampen market enthusiasm. Now, with this uncertainty confirmed, investors are liquidating risky positions, ranging from technology stocks to cryptocurrencies.

Furthermore, the effect of the federal shutdown was not limited to data handling or monetary policy, but millions of Americans suffered disruptions in federal services, with social programs like SNAP suspended, wages frozen, and massive flight cancellations due to a lack of air traffic control personnel.

Over $1.000 billion liquidated and massive outflows in spot ETFs

Within the crypto market, macroeconomic uncertainty acted as the trigger for a chain reaction. Bitcoin's drop below key levels, such as $100.000, triggered a massive liquidation of leveraged positions.

According to data from the CoinGlass platform, a total of [number] were liquidated in the last 24 hours $1.120 billion in cryptocurrency derivativesThe vast majority of these liquidations, $983 million, corresponded to "long" positions—that is, investors who had bet that the price of Bitcoin and other assets would rise. When the price fell, their positions were automatically closed, adding more selling pressure to the market and accelerating the decline.

This selling pressure didn't just come from retail traders. Institutional sentiment also showed signs of weakness. On Wednesday, spot Bitcoin exchange-traded funds (ETFs) saw net outflows of approximately $278 million. On Thursday, the outflows were even greater, reaching $870 million. For analysts, these outflows demonstrate that large investors are also reducing their risk exposure.

In addition, the decline was widespread across the crypto ecosystem. Large-cap assets like Ethereum (ETH) and Solana (SOL) saw drops of around 10%, confirming the risk-averse sentiment throughout the sector.

What do on-chain data and the cost of BTC production say?

Despite the negative outlook in the short-term market, two key metrics, one fundamental and the other on-chain analysis, offer an objective perspective on potential support levels for Bitcoin.

First, there is the Bitcoin production costExperts at JPMorgan noted that the cost to mine a new coin has recently risen from $92.000 to nearly $94.000. This adjustment is due to the increased difficulty on the network, a technical factor that regulates the amount of energy and time required to mine a BTC coin. 

Historically, this production cost has functioned as a natural floor for the price of BitcoinIn simple terms, it indicates the minimum required for miners to continue operating profitably. If the market price consistently falls below this threshold, mining would cease to be viable, which could reduce the supply of available coins and eventually halt the price decline.

On the other hand, there is the Unrealized Net Earnings (NUP) indicatorThis indicator measures the proportion of coins that, theoretically, are profitable for their holders even though they haven't been sold. Currently, the NUP has fallen to 0.476, a historically low level often associated with periods of intense fear or capitulation in the market. According to analysts, similar levels in 2024 foreshadowed significant price increases, ranging from 15% to 25% in the following 30 days.

According to experts, these metrics suggest that, although macroeconomic sentiment is negative, the fundamentals of the Bitcoin network and the historical positioning of investors may be approaching a point of selling exhaustion.

Bitcoin between political uncertainty and its technological foundation

The current Bitcoin landscape clearly reflects its dual nature: it remains a risky asset vulnerable to Federal Reserve decisions and global political volatility, but also an asset supported by its technological fundamentals and the behavior of those who hold it long-term.

Currently, Bitcoin's price is caught between two opposing forces. On one hand, the uncertainty generated by the US government shutdown and the lack of solid economic data has created an atmosphere of distrust, leading many investors to liquidate their positions. On the other hand, technical factors such as the estimated production cost of approximately $94.000 per Bitcoin and on-chain sentiment indicators show a solid base reinforcing the support level.

Thus, while the US Congress seeks to resolve its differences and the Federal Reserve awaits clear signals from upcoming economic data to define its monetary policy, the Bitcoin market remains in a state of tense anticipation. Investors are waiting for precise guidance that will allow them to navigate with greater confidence and dispel the current fog of uncertainty that still prevails.