Key Points

• Bitcoin dropped to $90,000 levels, despite a potential upcoming supply-shock-driven rally.
• BTC reserves across crypto exchanges dropped to 2.35 million BTC as of today.

The week ahead of the Trump administration’s debut in the US kicked off with market volatility that sent Bitcoin to $90,000 levels. However, optimism remains present in the market, driven by more factors including a supply-shock-driven rally, stemming from dropping BTC reserves.

Bitcoin Price Drops to $90,000 Levels

At the moment of writing this article, BTC is trading above $90,000, down by over 3% today. Earlier, BTC surpassed $95,000, before seeing the recent price decline to current levels.

According to CoinGlass data, BTC recorded over $102 million in liquidations in the past 24 hours, $82 million in long positions, and over $20 million in shorts.

A week ago, on January 6, BTC was trading above $102,000, but the coin’s price debuted a downward trajectory due to multiple factors, including BTC ETF outflows, US government BTC selling-triggered FUD, and more.

Also, last week, on Friday, the US revealed a hotter-than-expected US jobs report, which triggered investor fears that the US Federal Reserve may keep interest rates higher. The next FOMC meeting is scheduled for January 29, and currently, there are over 97% odds that there won’t be any interest rate cuts this month, according to CME Group data.

However, on the other hand, post-halving January price volatility is considered normal, and, more than that, there are plenty of reasons to remain optimistic that BTC will be able to cross the important psychological $100,000 level soon.

BTC Recovery to $100,000 Currently Lacks Trading Activity

The $100,000 level remains a resistance for BTC, before more upside potential. While the digital asset’s recovery above the important psychological level is reportedly imminent, thr crypto market currently lacks trading activity for a significant rally, said Ryan Lee, Chief Analyst, and Bitget Research.

The analyst recently said that while market sentiment seems to be stabilizing, reduced selling pressure suggests a potential consolidation or an upcoming upward trajectory if the $100,000 resistance level is overcome.

He also said that low daily trading volume mirrors a lack of decisive momentum to break through the current resistance or support levels.

Crypto trading volume reportedly dropped to levels not seen since the US elections, says the Santiment market intelligence platform via an X post today.

The firm explained that this “trading paralysis” swept the markets with top projects across L1s and L2s, memecoins, and AI saw this level on November 4. According to them, the lack of excitement is a sign of FUD which boosts the probability of rebounds.

On the other hand, BTC’s 24-hour trading volume surpassed $39 billion, up by almost 120% today.

Why BTC Could Break $100,000?

However, BTC could break the important $100,000 level once more due to multiple factors.

BTC Exchange Reserves Drop to 7-Year Low

First of all, crypto investors see a potential upcoming supply shock triggered by BTC reserves hitting almost a seven-year low, thanks to continued institutional buying.

BTC reserves across all crypto exchanges dropped to $2.4 million BTC as of today, January 13, according to CryptoQuant data.

This reportedly marks levels not seen since June 2018, when BTC was trading above $6,000.

Falling BTC supply on exchanges could signal an upcoming price rally triggered by a supply shock – this occurs when strong buyer demand meets a decreasing amount of BTC, which leads to a price surge for the digital asset.

Continued Institutional Buying

The dropping BTC supply on crypto exchanges means continued buying by institutional participants, the Head of Research at Bitwise, André Dragosch said.

In a post on X, he said that the global hedge funds are apparently buying the BTC dip. He noted that the 1 million beta of global hedge funds’ performance to BTC has increased from its recent cycle lows, showing increasing market exposure to BTC and other digital assets.

MicroStrategy Buys More BTC

Speaking of increased BTC adoption and buying, MicroStrategy just bought more BTC. In a post via X, the firm announced buying 2,530 BTC for $243 million. The company now holds 450,000 BTC, worth over $40.9 billion.

The company was expected to announce a new BTC purchase, following Michael Saylor’s post yesterday via X.

On January 12, Saylor noted that he was thinking about the next green dot on SaylorTracker.com – a new MicroStrategy portfolio tracker that was showing over $42 billion in BTC as of yesterday and an all-time 51% appreciation of MSTR shares.

On Christmas, the company made a bullish BTC announcement, hinting at $3.3 trillion in upcoming investments.

Seven days ahead of the upcoming Trump administration debut which will bring crypto-friendly policies, the crypto market is expected to recover and push BTC above the important $100,000 level.