Is Bitcoin’s Dip Necessary for Recovery?

Bitcoin is trading around $94,000 – a far cry from the all-time high (ATH) above $108,000 – and investors are evaluating the potential for a recovery.

Bitcoin price dropped significantly below its all-time high in 2025. While some analysts predict further declines, others remain optimistic about the recovery potential.

Bitcoin price is currently hovering around $94,000, a far cry from the all-time high (ATH) set earlier this year at over $108,000. As the market dips, investors are keeping a close eye on the potential for a recovery and the factors that could influence it.

Several analysts, including Tom Lee of Fundstrat Global Advisors, have suggested that Bitcoin could experience further declines before entering a new bullish phase. Lee's analysis indicates that the price could drop to $70,000 or even lower, around $50,000.

However, the renowned analyst maintains that such corrections are typical for an asset with Bitcoin's volatility and often correspond to the halving cycle, which has historically served as a key driver of growth for the cryptocurrency.

Analyzing the current market dynamics, Bitcoin has undergone a 15% correction from its December peak, with crucial support levels at $88,000 and $90,000. Technical patterns, such as a falling wedge and V-shaped recovery, suggest the potential for bullish momentum.

According to several analysts, including Recht Capital, a daily close above $91,000 is critical to sustaining the uptrends and keeping the market bullish.

Despite the market dips, institutional players like MicroStrategy have engaged in aggressive buying, with the company adding 2,530 BTC during this downturn.

Moreover, several opportunities and risks present themselves in the current market landscape. Failure to hold support levels could lead to further price declines and potentially amplify the market downturn.

However, historical trends indicate a strong rebound as the market shifts into February, a month that has traditionally brought bullish momentum to Bitcoin.

In terms of opportunities, the current dip could serve as an advantageous entry point for investors aiming to accumulate Bitcoin and capitalize on the next bullish cycle.

As we approach the end of January, several crucial dates to watch for in relation to Bitcoin price include the announcement of the US Consumer Price Index (CPI) on Thursday, Jan. 12, after hours. This data is closely followed by economists, traders and the Federal Reserve to assess the state of inflation, which could impact market sentiment.

Later in the month, the Federal Reserve is set to announce its decision on interest rates, which will undoubtedly shape Bitcoin's path further. Tighter prices on interest rates often lead to a shift in capital away from riskier assets, such as cryptocurrencies.

However, the narrative could change if the CPI report shows higher-than-expected inflation, presenting a unique opportunity for Bitcoin to shine as an inflation hedge. As a result, investors are keeping a watchful eye on these upcoming events and their potential to influence Bitcoin's price trajectory.

Despite the volatility in the short term, several crypto enthusiasts remain optimistic about the long-term prospects. Projections from VanEck and Bitwise suggest that Bitcoin could experience a surge to $180,000 to $200,000 by the end of 2025.

Key drivers for this bullish outlook include increasing institutional adoption, limited supply and potential shifts in policy, such as the creation of a Bitcoin-reserve by the US, presenting an opportunity for opportunistic investment and long-term gains.