Hi! Eric here.

Bitcoin traders are looking rather gloomy right now.

On Friday, the top cryptocurrency’s price dipped below $100,000 for the second time this week. It’s now trading about 20% below its $126,000 record high from early October.

While market watchers kicked off the year by predicting that Bitcoin would hit $200,000 before 2026, Galaxy Digital’s analysts now say that we’ll be lucky if the price manages to drag itself to $120,000 before New Year’s Eve.

What’s driving this bearishness?

“Simply put, there’s little on the horizon to be bullish about,” Sean Dawson, head of research at perpetual-trading platform Derive, told me.

He has a point. The crypto industry is still reeling from the October 10 crash that cut some $500 billion from the total value of the crypto market, as well as the $128 million Balancer hack on November 3.

Simon Peters, crypto analyst at trading platform eToro, told me that liquidations of over $1 billion since the start of November have added to the bearishness surrounding Bitcoin’s price.

Outside of crypto, several macroeconomic factors are putting pressure on the price.

In October, the Federal Reserve cut interest rates, which is usually a boon to risk-on assets like cryptocurrencies. However, hawkish comments from central bank Chair Jerome Powell have dragged down the probability of further cuts at the Fed’s December meeting to about 70%.

With the risk of interest rates remaining high, investors are less incentivised to inject capital into riskier assets like Bitcoin, Dawson said.

The ongoing US government shutdown, uncertainties surrounding Washington’s trade war with Beijing, and fears over whether the artificial intelligence bubble will burst also weigh on global markets.

Even so, market watchers remain bullish for the long-term prospects of crypto.

“While the pullback is likely to rattle some investors, volatility of this scale is not unusual,” Peters said.

He noted that even Bitcoin dropped from $109,000 to $74,500 between January and April before rallying to reach its latest all-time high price.

But for Bitcoin to bounce back, Dawson said that the crypto needs two things above all else: peace and quiet.

“No insolvency announcements, nor hacks, would re-establish trust in the market,” he said.

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