Forex Analysis & Reviews: 12.03.2025 - Bitcoin Depends on Sentiment...

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12.03.2025 11:24 AM

Bitcoin Depends on Sentiment in the U.S. Stock Market

The cryptocurrency market has seen a slight recovery after another sell-off earlier this week. However, the situation remains tense, and selling pressure could return at any moment.

One of the factors limiting a deeper correction is the outflow of funds from spot Bitcoin and Ethereum ETFs. Geopolitical tensions also continue to weigh on financial markets. Escalation of trade conflicts or new sanctions could trigger another wave of sell-offs. Technical analysis does not provide much optimism either, as Bitcoin and many other cryptocurrencies remain below key resistance levels, indicating that bears still dominate the market.

Meanwhile, Geoff Kendrick, Head of Digital Asset Research at Standard Chartered, stated that Bitcoin's recent downward movement is closely tied to broader risk asset issues rather than any specific problem within the cryptocurrency itself. "I would say that Bitcoin is trading in very close correlation with the so-called 'Magnificent Seven plus Bitcoin,' and its decline is directly linked to the fall in stocks of cryptocurrency exchanges and companies that hold and invest in Bitcoin," Kendrick wrote in a client report.

He added that Bitcoin's decline appears to be driven by broader market sentiment rather than asset-specific issues. Kendrick suggested that Bitcoin's recovery would likely depend on two key catalysts: a broader rebound in risk assets or positive Bitcoin-related news, such as government purchases for crypto reserves by the U.S. or other countries.

Regarding risk assets, Kendrick noted that a clear stance on tariff policy or a rapid shift toward rate cuts by the Federal Reserve would be necessary to drive a recovery.

On the bearish side, Kendrick warned that if the downward trend continues, a drop below $76,500 could quickly lead Bitcoin to test support around $69,000. However, he reaffirmed his long-term bullish outlook, predicting that Bitcoin will reach $200,000 by the end of 2025.

"My $200,000 target remains unchanged despite this short-term noise. In fact, all this noise increases the likelihood of a Fed rate cut, which makes me even more confident in my long-term projections," Kendrick stated.

As for Bitcoin's technical outlook, buyers are now aiming to reclaim the $83,400 level, which would pave the way for a move to $85,000, with $87,200 within reach. The final target would be the $88,900 high, and a breakout above this level would signal a return to a medium-term bullish market. In the event of a decline, buyers are expected to appear around $80,900. A drop below this area could quickly send BTC toward $78,800, with the final downward target at $76,800.

Regarding Ethereum's technical picture, a solid hold above $1,905 would open the way to $1,980. The ultimate target would be the yearly high around $2,055, a breakout of which would confirm a return to a medium-term bullish market. If Ethereum declines, buyers are expected at $1,831. A drop below this area could push ETH quickly to $1,755, with the lowest target at $1,662.

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*Disclaimer: The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.