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After reaching a record high of nearly $112,000, Bitcoin has experienced a 7% decline, driven by profit-taking, rising geopolitical tensions, and cautious signals from the Federal Reserve. This dip, while significant, occurs within the context of a broader rally fueled by increasing demand for spot Bitcoin ETFs and a tightening supply.

Understanding Bitcoin’s Recent Price Movement

Bitcoin (BTC) adoption continues to accelerate, with companies like GameStop and Trump Media incorporating it into their treasuries. Coupled with the cryptocurrency’s capped daily mining output of just 450 coins, the recent pullback may be viewed as a temporary pause in a longer-term structural uptrend.

As of Saturday, Bitcoin dropped below $104,000, marking a 7% decline from its all-time high of $111,900. This correction follows a 50% surge from its April lows to its recent peak. Such pullbacks are common in markets after strong rallies, where investors often realize profits.

Geopolitical and Economic Factors Impacting Bitcoin

Bitcoin’s decline coincided with rising geopolitical concerns. U.S. Treasury Secretary Scott Bessent reported stalled trade negotiations between the U.S. and China, while former President Trump accused China of failing to honor trade commitments. Additionally, new tariffs on steel and aluminum were announced, further straining relations.

Meanwhile, the Federal Reserve minutes revealed a cautious stance on interest rate cuts. Officials are adopting a wait-and-see approach, monitoring the economic impact of ongoing tariffs before making policy adjustments. These factors have added to investor caution, influencing Bitcoin’s price trajectory.

Strong Supply and Demand Dynamics for Bitcoin

Despite the recent dip, Bitcoin’s supply and demand fundamentals remain robust. Demand for spot Bitcoin ETFs is surging, with cumulative inflows exceeding $44 billion. Corporations like GameStop and Trump Media have also begun purchasing Bitcoin for their treasuries, further driving demand.

On the supply side, the availability of Bitcoin on exchanges has dropped by 57% since March 2020, decreasing from 3.22 million coins to just 1.37 million. This trend is accelerating as more investors move their holdings off exchanges into cold storage. Additionally, large institutional buyers are acquiring Bitcoin at a rapid pace, further tightening supply.

With daily mining output limited to 450 coins and the supply held by miners at its lowest level since 2010 (just 1.74 million coins), Bitcoin’s scarcity is becoming increasingly apparent. These dynamics suggest that the cryptocurrency may continue to rise over the long term.

Bitcoin Price Technical Analysis

From a technical perspective, Bitcoin’s price remains above the 50-day and 100-day Exponential Moving Averages (EMAs), signaling ongoing bullish momentum. The daily chart also reveals the formation of a bullish flag pattern—a continuation signal in technical analysis—indicating the potential for further upward movement.

In addition, Bitcoin has formed a cup-and-handle pattern, with the depth of the cup measuring approximately 32%. This pattern suggests a potential target price of $144,650, calculated by measuring the depth of the cup from its upper edge.

Looking Ahead

While short-term fluctuations are to be expected, the combination of rising institutional adoption, growing demand for ETFs, and tightening supply provides a solid foundation for Bitcoin’s long-term growth. Investors should remain mindful of broader market conditions and geopolitical developments that could impact the cryptocurrency’s price dynamics.

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