After a strong rally pushed Bitcoin to a record $111,900, the leading cryptocurrency has pulled back. A mix of profit-taking, geopolitical concerns, and a cautious Federal Reserve outlook has triggered a 7% dip, bringing Bitcoin below $104,000.
Why Bitcoin Is Dropping
Bitcoin’s recent drop follows a 50% surge from April lows. This type of retracement is typical after large upward moves, as investors lock in gains.
Adding pressure, U.S.-China trade tensions flared up. Treasury Secretary Scott Bessent noted that trade talks had stalled. At the same time, Donald Trump criticized China for not honoring trade agreements and proposed tariff hikes on steel and aluminum.
Meanwhile, the Federal Reserve released minutes showing officials are not ready to cut interest rates. Instead, they’re holding back to evaluate how new tariffs may impact the economy.
Demand Remains Strong, Supply Shrinks
Despite the pullback, Bitcoin’s long-term outlook remains bullish. Demand is rising, especially from spot Bitcoin ETFs, which have seen over $44 billion in cumulative inflows.
GameStop and Trump Media are among the latest companies to add Bitcoin to their treasuries. On the supply side, Bitcoin is getting harder to find:
- Only 450 BTC are mined daily.
- Supply on exchanges has dropped by 57% since March 2020, from 3.22M to just 1.37M.
- Miners’ BTC holdings are now at 1.74M, the lowest since 2010.
These supply constraints combined with rising demand could drive prices higher in the long term.
Bitcoin Price Technical Outlook
Technically, Bitcoin is still in a strong position:
- It remains above its 50-day and 100-day Exponential Moving Averages (EMAs).
- A bullish flag has formed, typically a continuation signal.
- There’s also a cup-and-handle pattern, with a projected upside target of $144,650 based on the depth of the pattern.
Currently, BTC is trading around $104,170, still well above key support levels.
