Market Panic and What’s Next?
Bitcoin’s decline to below $80,000 was down 14% in a week. The leading cryptocurrency currently trades at $77,800, while Ethereum trading volume has dropped to $1,860 – the lowest since November 2023.
This downturn is a level of unseen sentiment since the 2022 bear market is rising.
Extreme fear is driving Bitcoin clearing
Crypto market sentiment Sleeping into extreme fear. The crypto fear and greed index, which soared to over 92 last year, is now only 17 years old. This shift reflects the widespread market correction driven by the massive capital outflows of digital assets.
In the past four hours, Total liquidation exceeds US$195 millionthe long position accounts for US$161 million.
The sell-off shows that traders are caught off guard, resulting in forced liquidation and accelerated the decline of Bitcoin.
Institutional investors cut exposure
Institutional investors have been unloading digital assets for four consecutive weeks. Seen in the week ending March 7 $876 million outflow From digital asset investment products.
This brought the four-week period to $4.75 billion, reducing year-to-date inflows to $2.6 billion. Bitcoin was the first to lose $756 million.
Now, the total assets managed by digital funds have now fallen by $39 billion from its peak. It now has a price of $142 billion, the lowest since mid-November 2024.
U.S. policy actions have exacerbated sales pressure. President Trump’s new tariffs In Canada, Mexico, China, and the EU could expel institutional investors from risky assets such as cryptocurrencies.
“The action of crypto and inventory is increasingly one-sided. The red sun is the crimson sun and vice versa, which is another sign of changing the appetite for risk. Emotion is the ultimate driving force of price,” Write Kobeissi letter.
In addition, Trump’s remarks at the White House crypto summit on Friday sparked further uncertainty.
He confirmed a plan US Bitcoin Reservesnoting that the government will use occupied BTC but will not make other purchases. This weakens market confidence and leads to further sell-offs.
What’s next for Bitcoin?
Market experts have different opinions on Bitcoin’s next move. Former Bitmex CEO Arthur Hayes expects Bitcoin to drop to $70,000 Before a new bullish cycle begins.
“The ugly start of a week. It looks like BTC will retest $78,000. If it fails, the next $75,000 in the crosshair. There are a lot of options between $70,000 and $75,000. It would be violent if we go into that range,” Write Arthur Hayes.
at the same time, MicroStrategy announces plans Raising up to $21 billion through the 8.00% series of permanent preferred stock offerings, potentially using funds for further Bitcoin acquisitions.
Some analysts believe Bitcoin’s price follows liquidity trends. After the bottoming out, the M2 currency supply has been recovering.
The M2 money supply includes cash, check deposits and easy-to-convert near-monetary assets, reflecting overall liquidity in the economy.
“Some people think that liquidity through the M2 money supply is the real driver of Bitcoin’s price. The M2 money supply has been lower and has been recovering sharply. If this is true, we should see Bitcoin start to be higher in the next few weeks.” Write Analysts for encrypted streams.
However, skeptics’ warnings are not all M2 liquidity translates into crypto inflows.
Currently, Bitcoin remains under pressure, which will determine in the coming weeks whether this dip will expand further or lay the foundation for new rally.
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