The week started with a sharp drop in Bitcoin, with its price holding just above $80,000. Investors are worried about further declines.
Billions Lost as Bitcoin Falls
The recent drop in Bitcoin's price has wiped out over $5 billion, mostly affecting long positions. Bitcoin is now down nearly 30% from its January highs, causing concern as it has fallen below the 200-day moving average, a key bearish indicator. The BTC Strategic Reserve initiative hasn't helped to stabilize the situation, while institutional investors are withdrawing funds from Bitcoin ETFs at record levels, underscoring the diminishing demand.
A 'Textbook Correction' in Progress
10x Research describes the current situation as a 'textbook correction', a natural pullback after a significant rally. Analysts note that 70% of sellers are recent investors who entered the market within the last three months and are panic-selling. The Bitcoin Fear & Greed Index has dropped to extreme fear, while trading volumes have declined, indicating a lack of new buyer participation. Additionally, El Salvador halting its Bitcoin-related projects has further dampened market expectations.
Upcoming Events and Bitcoin's Outlook
Volatility in the Bitcoin market is expected to continue this week, as two major U.S. inflation reports are set to be released. High inflation could prompt the Federal Reserve to maintain a tight monetary stance, adding pressure to risky assets like Bitcoin. Furthermore, Canada's retaliatory measures following recent U.S. trade tariffs are unsettling global markets. Bitcoin's ability to hold above $80,000 will be crucial. If stability ensues, a recovery might follow, but breaking below key support levels could lead to a further decline towards $70,000.
The future outlook for Bitcoin remains uncertain. Breaking through current levels may lead to further drops. Traders are preparing for more challenges ahead.
