Bitcoin has recently experienced another episode of instability: its price fell to $83,400, the lowest level since November 2024. This led to over a billion dollars in derivatives market liquidations. The main causes are macroeconomic and financial factors affecting the asset.
Bitcoin's Sharp Drop and Its Consequences
The sudden drop of Bitcoin to $83,400 marked a major turning point for financial markets. In just three days, the cryptocurrency lost nearly $13,000, although it somewhat rebounded to $86,300. This loss was accompanied by massive liquidation of leveraged long positions, which amplified the downward spiral and increased market volatility. The most affected were those traders who were most exposed to risk.
Macroeconomic Impact on the Market
Among the primary reasons for Bitcoin's fall are fears of a global recession, prompting investors to shy away from risky assets. Meanwhile, U.S. protectionist policies, particularly new taxes on imports from Canada and Mexico, created additional market tensions. This unstable economic context enhanced the appeal of U.S. government bonds at the expense of volatile assets like Bitcoin. Even gold, traditionally considered a safe haven, fell by 2.2% in two days, indicating market nervousness.
Factors Weakening the Crypto Market
Beyond the macroeconomic context, other factors have also weakened Bitcoin’s bullish momentum. The company Strategy, often seen as a driver for BTC's rise, faced challenges with its strategy, causing its shares to drop by 19.4% in one week. This raised doubts about its ability to sustain massive BTC purchases. The ambition to raise $42 billion over three years to continue accumulating Bitcoin appears increasingly uncertain.
Meanwhile, Bitcoin ETFs, which were supposed to stabilize the market, faced net outflows of $1.1 billion in just one day, indicating a lack of confidence among institutional investors amid current volatility. This situation is exacerbated by the imminent expiration of Bitcoin options amounting to $6.9 billion. With a majority of call options priced well above the current level, sellers now have a distinct advantage to maintain downward pressure.
The fall of Bitcoin to $83,400 illustrates the current fragility of the market amid macroeconomic turbulence and internal dynamics within the sector. Between massive outflows from ETFs, uncertainties surrounding the Strategy company, and pressure on BTC options, signals from investors reflect a lack of conviction about the asset's resilience in the short term. While a technical rebound cannot be ruled out, the market must first regain stability and liquidity to avoid further shocks. As volatility intensifies, the central question remains whether Bitcoin can still play its role as a safe haven or if it has reverted to being purely a speculative asset in the hands of the most aggressive traders.
