Bitcoin's price fell to $64,435 amid macroeconomic shocks, affecting the entire crypto market. Analysts warn of potential liquidations if it drops below $60,000.
On February 23, Bitcoin's price fell sharply to $64,435 within just two hours, prompting declines across the cryptocurrency market. As of the latest update, Bitcoin is trading at $65,587, reflecting a 4.2% decrease over the previous day.
Other major cryptocurrencies also suffered losses, with Ethereum down 5% to $1,879, XRP falling 4.5% to $1.36, BNB decreasing by 3.7% to $598, and Solana losing 7.7%, now priced at $78.
Market analysts attribute this downturn to several macroeconomic factors, including widespread unrest in Mexico that has dampened investor confidence in riskier assets. In the U.S., pending home sales have reached a historic low, the worst since 2001.
The situation worsened following a U.S. government decision to increase import tariffs from 10% to 15%, which has contributed to a decline in the dollar's value and impacted Wall Street futures. Additionally, the yen's strength is leading investors to expect tighter monetary policy from the Bank of Japan, resulting in a reduction of leverage by global funds.
According to BTC Markets analyst Rachel Lucas, the market is facing a liquidity crisis, with spot trading volumes plummeting by 59%. Kronos Research's CIO Vincent Liu highlighted $60,000 as a crucial support level for Bitcoin. He proposed that a stabilization in the $65,000-$66,000 range could signal a recovery, while a rise above $70,000 could indicate a trend reversal. The market's recovery may hinge on new investments into ETFs and upcoming U.S. unemployment data.
Coin Bureau warned that if Bitcoin falls below $60,000, it could trigger liquidations amounting to $1.78 billion. The Fear and Greed Index has dropped to an unprecedented low of 5, reflecting extreme fear among investors.
Should Bitcoin finish February in a downtrend, it would mark the fifth consecutive month of losses, the longest streak in seven years. Open interest in Bitcoin has halved to $19.5 billion from a January peak of $38.3 billion, indicating a significant reduction in market activity.
Despite the current turmoil, long-term forecasts remain optimistic. Large investors have accumulated 200,000 BTC over the past month, and the short-term Sharpe ratio for Bitcoin has dropped to -38.38, a level historically associated with bear market bottoms preceding substantial rallies.
Investor sentiment has soured, with many retail investors experiencing panic following the breach of the $65,000 support level. This fear has historically served as a precursor to rapid recoveries in price, as seen in past market cycles. Google searches for “Bitcoin to zero” have surged, reaching record highs among U.S. users.
CryptoQuant analyst Darkfost reported that large investors who bought Bitcoin in the last six months are sitting on unrealized losses of approximately $26 billion, one of the highest levels this year. These losses could lead to panic sell-offs if volatility spikes.
In related news, Ethereum co-founder Vitalik Buterin has accelerated his sales of Ethereum, offloading 1,869 ETH worth $3.67 million over two days, coinciding with a 5.7% decline in ETH's price. Analysts recall his previous significant sale, which led to a dramatic price drop for Ethereum.
