On Friday, Bitcoin’s value dropped over 4% within a 24-hour period, bringing it close to its seven-day low of $88,091, which is approximately 4% below its seven-day high of $92,805.

Currently, Bitcoin’s global market capitalization is approximately $1.77 trillion, with a 24-hour trading volume reported at $48 billion.

Despite this recent downturn, JPMorgan remains optimistic regarding Bitcoin’s long-term prospects. The financial institution continues to uphold its volatility-adjusted target for Bitcoin at $170,000 over the ensuing six to twelve months.

Market analysts assert that this target model effectively considers fluctuations in pricing and mining expenses.

A critical player in the Bitcoin market is Strategy (MSTR), recognized as the largest corporate holder of Bitcoin. This entity possesses 650,000 Bitcoin, and its enterprise-value-to-Bitcoin-holdings ratio, known as mNAV, currently stands at 1.13.

Bitcoin Mining Pressures

Current pressures on Bitcoin mining are becoming increasingly pronounced. The network’s hashrate and mining difficulty have both seen declines. High-cost miners located outside China are retreating in response to rising electricity costs and decreasing prices, prompting some miners to liquidate Bitcoin to maintain solvency.

JPMorgan now estimates the production cost of Bitcoin at $90,000, a reduction from the $94,000 estimate from the previous month. While falling hashrates may lower production costs, the immediate consequence is the persistent selling pressure exerted by miners.

Institutional investors are exhibiting caution, as evidenced by the recent performance of BlackRock’s iShares Bitcoin Trust (IBIT), which has encountered six consecutive weeks of net outflows. According to Bloomberg, over $2.8 billion has been withdrawn from the ETF during this timeframe.

These withdrawals indicate a subdued interest among traditional investors, despite Bitcoin’s stabilization in price. Analysts point out that this trend represents a shift from the consistent inflows observed earlier in the year.

The broader market is still in recovery mode following the liquidation event on October 10, which resulted in the loss of over $1 trillion in cryptocurrency market value and propelled Bitcoin into bear market territory.

While Bitcoin’s price has regained some footing this week, the momentum appears fragile.

Analysts from JPMorgan now contend that Bitcoin’s next significant movement will rely less on miner activities and more on Strategy’s capability to maintain its holdings without resorting to sales. The mNAV ratio and reserve fund provide reassurance that the company can navigate through market fluctuations.

There are also potential catalysts on the horizon. The decision by MSCI regarding its index on January 15 could impact Strategy’s stock and, indirectly, Bitcoin. Analysts suggest that a favorable outcome could incite a substantial rally.

In a recent statement, Michael Saylor from Strategy addressed the MSCI index disputes, asserting that Strategy is a publicly traded operating company with a $500 million software business and a Bitcoin treasury strategy, rather than merely a fund, trust, or holding company.

He also highlighted the firm’s recent undertakings, which include five digital credit security offerings totaling over $7.7 billion in notional value.

Bitcoin Price Analysis

The breach below the 350-day moving average of approximately $100,000 and the $100,000 psychological threshold indicated the onset of a bear market, resulting in an immediate price drop of approximately 20%.

While U.S. dollar charts project a peak in 2025, the valuation of Bitcoin measured against gold peaked in December 2024 and has since decreased by over 50%, indicating a prolonged bear phase.

Historical bear cycles in gold suggest that potential support zones may be approaching, with current declines at 51% over 350 days reflecting both institutional adoption and constrained supply, rather than indicative of cyclical shifts.

At this point, the price of Bitcoin remains in proximity to $88,000.

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