Bitcoin (BTC) price has dropped below $80,000, triggering concerns about a deeper sell-off and increasing market instability.
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The sharp drop has intensified fears of a broader market downturn, with the total digital asset market cap falling 8.58%.
Bitcoinโs Sudden Sell-Off
Bitcoin took a steep dive early Friday during Asian trading hours, losing its $83,000 support level and sliding nearly 7% to around $79,000โits lowest price since early November 2024.
The decline was accompanied by a massive surge in trading volume across BTC/USD pairs, exceeding $71.5 billion in the past 24 hours.
This high volume likely triggered liquidations of nearly $410 million in leveraged Bitcoin long positions, accounting for almost half of the total $865.24 million in crypto liquidations over the same period, according to CoinGlass data.
Bitcoin is now down about 25% from its all-time high of $109,114, reached on January 20โthe day of U.S. President Donald Trumpโs inauguration.
The surge in liquidations has rattled investor confidence, as reflected in sentiment indicators.
The Crypto Fear and Greed Index, which measures market sentiment, remains deep in Extreme Fear territory, currently at 16 out of 100. While this is a slight recovery from yesterdayโs low of 10, the index reflects a dramatic shift in sentimentโjust a month ago, it stood at 72, indicating nearly extreme Greed.
Meanwhile, the broader crypto market has also taken a hit, with a total market dropping 8.58% over the past 24 hours to $2.62 trillion levels.
Why is Bitcoin Dropping?
Stock Market Weakness
The crypto market moves in tandem with the stock market, driven by shared macroeconomic factors like interest rates and investor sentiment.
U.S. stock indices have declined for several consecutive days, weighed down by economic concerns, weak corporate earnings, and geopolitical tensions.
Recent data points to a potential U.S. economic slowdown, while renewed tariff threats from the U.S. administration have further unsettled global markets.
Hedge Funds Selling Bitcoin ETFs
Some analysts attribute Bitcoin’s decline to hedge funds offloading their crypto ETF holdings, adding further sell pressure.
โOur analysis shows that over 50% of Bitcoin ETF inflows may have originated from hedge funds. This represents significant sell pressure as these funds unwind positions,โ analysts at 10X Research wrote in their latest report.
โWhile some of this flow may be offset through futures unwinding, it still sends a negative signal to the broader market. Top hedge funds hold approximately $10 billion in Bitcoin ETFs and appear to be actively reducing their exposure.โ
Whatโs Next for Bitcoin?
Bitcoin options data suggests that investors are hedging against further declines, with many expecting prices to revisit even lower BTC price levels.
According to Deribit, the worldโs largest crypto options exchange, Bitcoin put options at a $70,000 strike price have the second-highest open interest among all contracts expiring today.
In total, $4.9 billion in crypto options contracts will expire on Friday, February 28, which could lead to increased volatility and influence short-term price movements.
Why This Matters
The sharp decline in the Bitcoin (BTC) price signals rising investor anxiety and shifting market sentiment, with hedge funds offloading positions and billions in options set to expire. The coming days could determine whether the Bitcoin sell-off deepens or stabilizes.
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