Bitcoin (BTC) set new 15-week lows as of February 25, 2023, amid spiraling sell pressure from the U.S. market. The price of BTC/USD slipped to its lowest levels since mid-November, grappling with widespread liquidation across the cryptocurrency sector. Recent data indicated losses of nearly $1.6 billion traded within just one day, pushing market sentiment deep down to ‘extreme fear.’
According to data from Cointelegraph Markets Pro and TradingView, Bitcoin faced its most severe downturn yet, with the price approaching $86,000. This marks over 20% decline from its all-time high reached just a month prior, effectively entering bear market territory. Popular trader and analyst Rekt Capital noted the continuing downside deviations—“The downside deviation below the Range Low of the ReAccumulation Range is now in progress.”
Rekt Capital released insightful weekly charts outlining Bitcoin's price movements since ending the last macro bear market at the close of 2022. Despite presenting the risks of current trading conditions, Rekt acknowledged previous prices as “outsized bargain opportunities.”
Other analysts, like TheKingfisher, suggest potential price decreases could take Bitcoin to levels near the former all-time highs of $73,800 observed back in March 2024. “Long liquidations cluster heavily 68k-77k; short liquidations ramp up significantly 103k-138k,” TheKingfisher stated, indicating the imbalance between long and short positions may lead to future market volatility.
Taking macroeconomic factors impacting Bitcoin pricing, trading firm QCP Capital indicated the current inflation trends are no longer driving Bitcoin discussions. They stated: “Zooming out, equities, fixed income, and gold have largely shrugged off the data points previously blamed for broader market weakness, with BTC remaining flat.” The firm emphasized caution when assessing the future of Bitcoin, stating: “Recent BTC demand has been driven primarily by institutions like MicroStrategy financed through equity-linked note issuances…” QCP warned these funding avenues might be closing, potentially limiting institutional Bitcoin demand as the sector shows signs of stabilization.
On the other side of the trade, many Bitcoin traders appear undeterred by the sharp decline. Reports from Kraken revealed vitality among traders, as they engaged actively by ‘buying the dip’ after BTC’s price dropped under $88,000. Kraken's Alexia Theodorou elaborated on the situation, noting how the long-short ratio improved, setting record heights at around 0.8: “Despite bitcoin's price dropping below $90K, Kraken has seen a surge in traders opening long positions on its BTC perpetual markets.”
This suggests optimism persists even as institutional concerns loom overhead, pointing to continued appetite for investment among seasoned traders amid volatile market conditions. It is, nonetheless, important to recognize the precarious circumstances: Theodorou added, “While this record long-short ratio speaks to the underlying positive sentiment, there may still be excess leverage… This could potentially leave the market vulnerable to a longer squeeze.”
The current fluctuations and rapid changes within Bitcoin's market are drawing varied reactions. Many traders remain hopeful for rebounds sparked by value seekers willing to enter at lower prices. Yet, with volatile liquidations continuing to influence trends, it becomes imperative for participants to stay alert and informed, assessing risks closely.