- Bitcoin plunges over 20% from its ATH
- Crypto liquidations reached $773,28 million over the past 24 hours
- BTC ETFs experience record outflows this week
- Trump’s trade tariffs worries hit risk sentiment
- US Core PCE data tomorrow may not be a saving grace
- Bitcoin finds support around 200 SMA
Bitcoin’s Painful week continues, with the largest cryptocurrency extending its breakdown below 90k to a nadir of 82.2k. Bitcoin is now in a bear market, down over 20% from its recent high of 109.5k. The 12% drop observed in the first three days of this week marked the largest decline since the FTX bankruptcy in November 2022.
The sharp sell-off has resulted in total liquidations in the cryptocurrency market reaching $773.28 million over the past 24 hours. Long positions bore the brunt of this, with $600.83 million long positions liquidated. Bitcoin has experienced liquidations of $467.5 million, of which $388.87 million were long positions.
BTC ETFs See Record Outflows
Meanwhile, Bitcoin ETFs are experiencing record outflows. According to Coinglass data, net outflows reached $1 billion on Tuesday, the highest level on record, followed by a further $754.6 million in outflows on Wednesday, the second-highest outflow level on record. For Bitcoin to rise, BTC ETFs inflows would need to resume. However, the reduced BTC CME basis yield could see larger funds selling out of BTC and BTC ETFs. Should yields decline further, this could result in further downside for Bitcoin.
Trade Tariff Threats Hit Risk Sentiment
Bitcoin’s decline comes as President Trump has disappointed with a lack of quick and tangible actions to support the crypto market and as announcements regarding trade tariffs have raised concerns over the US economic and inflationary outlook. At the start of this week, Trump reaffirmed trade tariffs on Mexico and Canada from March 3rd and plans to curb Chinese investments. Yesterday Trump also pledged reciprocal tariffs of 25% on European imports.
What Next for Bitcoin?
The path of least resistance appears to be to the downside, as Trump’s trade tariffs on Mexico and Canada could be applied from Monday. This would likely be a risk-off event.
Before that, tomorrow’s core PCE data will be in focus and may offer a floor to the recent selloff. Core PCE expected to ease to 2.6% YoY in January, down from 2.8% in December. However, given the recent slate of weaker-than-expected US economic data, cooler-than-forecast Core PCE could confirm slowing growth, spurring a risk-off reaction rather than Bitcoin getting a boost from the prospect of more rate cuts from the Fed,
Fear & Greed Index hits “extreme fear”
Bitcoin losses have dragged the Crypto Fear and Greed Index to 10, registering extreme fear and a level that was last seen in June 2022. The index has been below this value for just 19 days in its 7-year history. Extreme fear could indicate investors are too worried and may provide a buying opportunity. However, the fundamental backdrop is far from encouraging and could point to a lower low.
Bitcoin Technical Analysis
Bitcoin broke out of its 90k- 110k consolidation pattern, breaking below 90k and falling to a low of 82.1k. The price found support from the 200 SMA and is attempting a recovery higher. The longer lower wick on yesterday’s candle suggests selling demand at the lower levels was weak.
The recovery may run into resistance at 86.2k, the 38.2% Fib retracement of the 49.5k August low and the 109.5k record high. A rise above here brings 90k back into focus and a neutral stance.
Sellers will need to break below the 200 SMA at 82k to extend losses to 80k, before opening the door to 72k, the 61.8% Fib retracement.
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