Bitcoin Price Analysis: BTC Rallies Then Drops, Risks $100,000 Breakdown

Bitcoin (BTC) registered a sharp increase on Sunday, rising over 3% to cross $106,000 and settle at $106,479. However, its struggles at higher levels continued as it lost momentum after reaching this level and declined substantially during the ongoing session. The flagship cryptocurrency is down nearly 2% over the past 24 hours, trading around the $103,000 mark. Strategy Acquires 7,390 BTC, Reveals Class-Action Lawsuit Michael Saylor’s Strategy completed the acquisition of 7,390 Bitcoin last week for nearly $765 million. According to the announcement, the company purchased the Bitcoin for $764.9 million at an average price of just under $103,500 per coin. Strategy also reported a Bitcoin yield of 16.3% year-to-date. Strategy executive chairman Michael Saylor had hinted at the purchase in a cryptic post on May 18. The company’s May 19 filing with the United States Securities and Exchange Commission (SEC) also revealed it was the subject of a class-action lawsuit. The lawsuit accuses Strategy officials of misrepresenting the nature of their Bitcoin investments. 0xngmi, a pseudo-anonymous developer at DefiLlama, stated, “The lawsuit seems to be people complaining that Microstrategy understated how much money it could lose if BTC went down, but if you’re buying a company that is self-labeled as leverage on Bitcoin, what do you expect? It’s pretty clear what will happen if BTC goes down.” The lawsuit accuses Strategy officials of violating Section 10(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 10b-5 thereunder, and Section 20(a) of the Exchange Act. “The [suit claims] that the named defendants made false and/or misleading statements with respect to and/or failed to disclose information with respect to the anticipated profitability of our Bitcoin-focused investment strategy and treasury operations, and the various risks associated with bitcoin’s volatility.” Strategy holds 576,230 BTC as of May 18, acquired for around $40.2 billion at an average price of $69,726 per coin. The firm’s total Bitcoin holdings are valued at nearly $60 billion at current prices. Bitcoin Risks $100,000 Breakdown Bitcoin has registered one of its largest daily declines during the ongoing session, with the price down over 3%. The price fell to a low of $102,145 before rebounding to reclaim $103,000. The marketwide decline was prompted by Moody’s downgrade of the US credit rating thanks to a growing budget deficit and the absence of a credible fiscal consolidation plan. Analysts believe the flagship cryptocurrency’s decline may confirm a bearish divergence and raise the prospect of a breakdown below $100,000. BTC jumped to a local high of $107,111 during the ongoing session but rapidly declined, with its RSI printing a lower high and hinting at a classic bearish divergence. Analysts from Swissblocks noted that Bitcoin grabbed liquidity around the $104,000-$106,000 levels but failed to sustain momentum. As a result, it faced another rejection at higher levels, putting its immediate support levels at $100,000 and $97,000 under pressure. Bitcoin (BTC) Price Analysis Bitcoin (BTC) has exhibited cautious optimism over the past two sessions, rising over 3% on Sunday and crossing $107,000 during the ongoing session. However, it failed to maintain its position above this level and plunged below $104,000. Analysts believe BTC must consolidate above $103,000 before it can breach the wall of resistance above $105,000-$106,000. Additionally, its performance also depends on US stock indices. A pullback in US markets could delay BTC’s recovery. Vikram Subburaj, CEO of Giottus Crypto Platform, stated, “If Bitcoin decisively breaks $107,000, aided by strong ETF inflows, it would lead to new highs for Bitcoin, with strong rallies expected among altcoins. Until then, traders are advised to minimize their losses and be ready to deploy cash in case of a breakout.” According to analysts, two factors were behind BTC’s jump on Sunday. The first is a proposal by President Trump to levy a 5% tax on remittances sent by individuals to their home countries. The proposal impacts 40 million people who wire a part of their income to their families living abroad. Analysts have warned that such a move could drive people to unofficial channels, including crypto. Another reason is an upcoming bill that proposes stablecoin regulation, set to be taken up by Congress this week. Republican Senator Bill Hagerty stated, “Next week, the Senate will make history when we debate and pass the Genius Act that establishes the first-ever pro-growth regulatory framework for payment stablecoins.” The sudden increase saw over $460 million in long positions wiped out. Economists have stated that BTC’s current price levels are due to growing institutional interest and sustained inflows into spot Bitcoin ETFs. Analysts believe the current price levels are sustained by strong inflows into Bitcoin ETFs, which registered $2.8 billion in net inflows in May, taking the total value past $122 billion. Singapore-based QCP Capital stated in a note to investors, “Looking ahead, we believe there is further room for digital assets to rally, especially as Coinbase’s inclusion into the S&P 500 on May 19 draws closer. History tells us that index inclusion tends to act as a short-term catalyst, as passive managers adjust their allocations to track the benchmark more closely.” BTC registered a substantial increase on Thursday (May 8), rising over 6% to cross $100,000 and settle at $103,093. The rally lost momentum on Friday as the price registered a marginal decline and settled at $102,851. Buyers returned to the market on Saturday as BTC rose nearly 2% and settled at $104,617. Despite a positive Saturday, the flagship cryptocurrency was back in the red on Sunday, dropping nearly 1% and settling at $103,802. BTC encountered volatility on Monday as buyers and sellers struggled to establish control. Sellers ultimately gained the upper hand as BTC dropped 1.04% and settled at $102,728. Source: TradingView BTC rebounded on Tuesday, rising 1.36% to $104,123, but fell back on Wednesday, registering a marginal decline and settling at $103,568. The price fell to an intraday low of $101,459 on Thursday but rebounded from this level to register a marginal increase and settle at $103,816. Price action turned bearish on Friday and Saturday as BTC registered marginal declines and settled at $103,235. Bullish sentiment returned on Sunday as the price rallied over 3% to cross $103,000 and settle at $106,479. The current session sees BTC down nearly 3%, recovering from a low of $102,145 to trade around $104,300. Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Source: Bitzo