Bitcoin price drops to $92.5K amid Fed rate hike concerns

Bitcoin's (CRYPTO:BTC) price has dipped to $92,500, driven by concerns over the U.S. Federal Reserve's tightening monetary policy.

This correction follows Bitcoin briefly breaching the $100,000 psychological mark on Jan. 7.

Ryan Lee, chief analyst at Bitget Research, cited strong U.S. economic data and potential interest rate hikes as key factors in Bitcoin's decline.

"This development makes cryptocurrencies less attractive as investments, while the Federal Reserve’s signals of tighter monetary policy further intensify market corrections," Lee stated.

Economic resilience has delayed expectations of a rate cut, with markets predicting the first cut by the Federal Reserve to occur on June 18, according to the CME Group's FedWatch tool.

For the upcoming Jan. 29 meeting, there is a 95.2% probability that interest rates will remain unchanged.

The price correction led to liquidations of over $631 million in leveraged long positions within 24 hours, CoinGlass data shows.

Lee noted that the large-scale liquidation could trigger a consolidation phase as traders reduce leveraged positions.

John Glover, chief investment officer at Ledn, suggested Bitcoin might drop below $90,000 before rallying.

"Using wave analysis, we appear to be completing what I view as the fourth wave, suggesting a rally toward the $126,000–$128,000 range following this consolidation phase," Glover explained.

To avoid further downside, Bitcoin must hold the $91,000 support level, according to crypto analyst Rekt Capital.

Analysts remain optimistic, forecasting Bitcoin's price to surpass $150,000 by late 2025, driven by a projected $20-trillion increase in the global money supply, which could funnel $2 trillion into Bitcoin.

At the time of reporting, the Bitcoin (BTC) price was $94,250.03.