Further Downside Likely for Bitcoin, but a Bullish Rebound Could Be Brewing

Bitcoin Drops Below $87K, but Lower Interest Rates Could Ignite the Next Rally

The shifting interest rate environment may offer relief to bitcoin bulls, despite recent turbulence in the crypto market.

Bitcoin Bears the Brunt of Crypto Market Woes

Bitcoin’s sharp decline—over 20% from its all-time high of $109,000 just five weeks ago—has some investors pointing fingers at the broader crypto market. On Tuesday, BTC fell to a low of $87,000, caught in the aftermath of a speculative frenzy gone wrong.

The record high in January coincided with a surge in memecoins, fueled by enthusiasm around Trump-linked tokens. However, the hype quickly turned to disaster as those coins crashed, leaving most investors with heavy losses.

Solana’s SOL, which powered much of the memecoin mania, has since plummeted by over 50%, leading the broader market decline.

Bitcoin bulls were anticipating strategic government adoption of BTC but were instead met with the failed Trump and Melania token experiment.

Bybit Hack Triggers a Fresh Sell-Off

Bitcoin had remained resilient despite the broader downturn, trading in a relatively stable range. As recently as last week, it appeared poised to reclaim the $100,000 level.

Then, the Bybit hack changed everything.

While bitcoin proponents were quick to highlight that the exploit stemmed from Ethereum’s vulnerabilities rather than BTC itself, the hack triggered a major sell-off in ETH, which has fallen 15% since. That bearish sentiment spilled over into bitcoin and other major cryptocurrencies.

Optimism Fades as Market Eyes Further Declines

Even long-term bitcoin bulls are starting to waver.

“Our expectations for this cycle were far beyond $108,000, so we’ve convinced ourselves we haven’t peaked yet,” wrote crypto analyst StackHodler on X. “But the reality is, no one knows for sure. We just dropped below the short-term holder realized price of $92,000… A retest of the 200-day moving average at $82,000 may be on the horizon.”

Standard Chartered’s Geoff Kendrick, who has been bullish on BTC’s long-term potential, issued a stark warning:

“Now is NOT the time to buy the dip. A move to the low $80,000s is likely,” he wrote. “Before bitcoin becomes attractive again, I expect a record $1 billion ETF outflow day—the current worst day is -$583M.”

Could Interest Rate Cuts Spark the Next Bitcoin Surge?

Bitcoin’s sell-off is part of a broader market downturn. The S&P 500 had its worst weekly performance since Trump’s inauguration, while the Nasdaq is now 5% off its December highs.

Several factors are at play—rising tariffs, fiscal tightening, and cooling market sentiment—but one key development stands out: interest rates.

The U.S. 10-year Treasury yield has fallen from 4.80% before Trump took office to 4.32% today. Expectations for Federal Reserve rate cuts have also surged. The probability of a May rate cut has doubled to 30% in the past week, while the chances of two cuts by June have tripled to 15%, according to CME FedWatch data.

“Falling U.S. Treasury yields are a long-term bullish signal for bitcoin,” Kendrick concluded.