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Bitcoin futures markets may still be overheated, and a hotter-than-expected CPI could trigger further drawdowns, Steno said.
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Bitcoin (BTC) holders should brace for more selloffs as rising US prices create an increasingly unfavorable macroeconomic backdrop for risky assets, Steno Research said in a Jan. 13 report.
Since mid-December, Bitcoin’s spot price has declined roughly 10%, dropping from all-time highs of around $106,000 to around $96,000 as of Jan. 14. Steno said this trend may continue, with BTC dropping to as low as $85,000 per coin.
The cryptocurrency’s sell-off largely reflects “ongoing repricing driven by an unfavorable macroeconomic environment, with inflation once again taking center stage,” Steno said.
Meanwhile, Bitcoin’s derivatives markets remain overheated, indicating “that there is still excess leverage that needs to be unwound during this repricing phase,” according to the report.
Sustained US inflation “could further pressure the crypto market, likely worsening conditions before prices eventually return to green,” Steno said.
Open interest in Bitcoin futures remains high. Source: Steno Research
Macroeconomic unease
On Jan. 10, a positive US jobs report sent BTC’s spot price tumbling below $93,000 as the US dollar rose on expectations of slower interest rate cuts.
Futures markets now gauge the probability of an interest rate cut in January at less than 3%, according to data from CME FedWatch.
“Bitcoin seems to be held back by strength in the US dollar, which is rising due to more hawkish Fed policy and the threat of tariffs,” Zach Pandl, Grayscale’s head of research, told Cointelegraph on Jan. 10.
Lower interest rates generally benefit risky assets such as BTC.
Steno expects the US Consumer Price Index (CPI) report on Jan. 15 to flag higher-than-expected inflation. It anticipates monthly headline price rises of around 0.4% versus consensus expectations of 0.3%.
10-year Treasury yields are rising on inflation fears. Source: Steno Research
“If our forecast proves accurate, this upside surprise will catch markets off guard and exert further downward pressure on digital asset prices,” Steno said.
“In this scenario, we estimate Bitcoin could drop as low as $85,000 per coin,” the researchers added.
Nonetheless, Steno expects 2025 to be the cryptocurrency market’s best year ever, with Bitcoin crushing all-time highs, among other potential “remarkable positive developments.”
In 2025, BTC will eventually hit $150,000 per coin, Steno said, citing factors including “an unprecedentedly favorable regulatory environment for cryptocurrencies, a supportive macroeconomic climate marked by declining interest rates and improved liquidity, and the historically strong post-Bitcoin-halving performance.”
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This article first appeared at Cointelegraph.com News
