The cryptocurrency market is experiencing a downturn, losing over $500 billion in a week. Bitcoin has dropped 15%, reaching a four-month low. Key factors include the rise in AI stocks and ETF outflows from Bitcoin.
Bitcoin Losses Amid NVIDIA Rally
One key reason for Bitcoin's decline is the rise in AI stock values, particularly those of NVIDIA. The company reported a Q4 revenue of $39.3 billion, up 12% from the previous quarter, and a 78% year-on-year increase. This strong performance led to a 4% rise in NVIDIA's shares, adding over $125 billion to its market cap.
Continuing Outflow from Bitcoin ETFs
Another significant factor is the ongoing outflow from Bitcoin ETFs. Between February 24 and February 26, outflows amounted to $2.43 billion, persisting for seven trading sessions. This selling pressure is led by major institutions like Fidelity, which contributes to the market's decline.
Impact of $5 Billion Option Expiry
Bitcoin is also under pressure due to the impending expiry of $5 billion in option contracts. Deribit data suggests that around 78% of these expiring options worth $3.9 billion are set to expire worthless. Additionally, $1.3 billion worth of Bitcoin has been transferred to exchanges, potentially leading to more selling.
Bitcoin continues to face losses, but the key support level stands at $83,000. If this level holds, a recovery may be possible. Historically, when the RSI level falls below 30, a short-term price bounce tends to occur.
