Bitcoin Price Decline
Bitcoin fell below $80,000 on Friday, marking a 27% drop from its all-time high of $109,000 reached in January.
As the largest cryptocurrency by market value declines, it has also dipped beneath its 200-day moving average, a significant technical indicator for traders assessing long-term trends.
ETF Outflows and Market Sentiment
This downturn comes amid increasing outflows from Bitcoin ETFs, which had previously fueled the rally to record highs. Investors have removed over $2 billion from spot Bitcoin ETFs in February, marking the largest weekly outflows since their inception.
In contrast, gold ETFs have seen rising inflows, indicating a shift towards traditional safe-haven assets amid macroeconomic uncertainty.
Despite this decline, the current drawdown is mild compared to past Bitcoin cycles. Historically, Bitcoin has faced at least 16 notable corrections from its all-time highs, with drops ranging from 30% to 85% before recovery.
The current trend mirrors a previous 33% drop that occurred from March to August 2024, which took 144 days to recover to new highs in November. More dramatic declines, such as the 78% drop from 2021-2022 and an 84% fall in 2018, required years for recovery.
Macro Pressures and Market Shifts
The recent pullback aligns with traders adjusting their expectations for Federal Reserve interest rate cuts, as ongoing inflation data reduces the chances of immediate easing. Higher interest rates usually put pressure on risk assets like Bitcoin, which had surged in late 2024 based on expectations of a more accommodative monetary environment.
Market uncertainties have been exacerbated by geopolitical tensions related to tariffs imposed by the Trump administration on China, Mexico, and Canada, affecting global financial markets.
Additionally, a stronger U.S. dollar and falling Treasury yields have presented further challenges to Bitcoin’s upward momentum. The situation worsened with a $1.5 billion security breach of the Bybit exchange—recorded as the most significant theft in crypto history—raising digital asset security concerns and increasing selling pressure.
Despite the market correction, long-term Bitcoin holders remain assertive. On-chain analysis shows that most selling pressure originates from newer investors, while wallets holding Bitcoin for prolonged periods stay relatively inactive.
Moving forward, Bitcoin’s prospects are uncertain. Historically, corrections of this scale take weeks to over a year to recover, influenced by macro conditions and market sentiment. Analysts are now focused on support levels around $75,000 and ETF flows for signs of renewed demand, as reported by Decrypt.
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