TLDR
- Bitcoin has fallen below $80,000, reaching a low of $77,800, marking its lowest price in four months
- Institutional investors have withdrawn funds for four consecutive weeks, with $876 million in outflows in the week ending March 7
- Trump’s tariff policies, recession comments, and disappointment over the national crypto reserve plan are contributing to market uncertainty
- The Crypto Fear & Greed Index has plunged to 17, reflecting extreme fear in the market
- Some analysts predict Bitcoin could drop to $70,000, while others expect a recovery based on increasing M2 liquidity
Bitcoin has fallen below the $80,000 mark for the first time since November 2024, dropping to $77,800 on Monday. The leading cryptocurrency’s price has declined approximately 14% in just one week. This drop comes amid growing market uncertainty and increasing concerns about US economic policies.
BTC Price
The price decline has wiped out all gains since mid-November. Technical indicators suggest further drops may be ahead. Bitcoin slipped under key support at the 200-day Exponential Moving Average of $85,722.
Other cryptocurrencies have followed Bitcoin’s downward trend. Ethereum has fallen to $1,860, its lowest price since November 2023. XRP is down 4% in the last 24 hours. Solana and Cardano have dropped 7% and 8% respectively.
Market sentiment has shifted dramatically in recent months. The Crypto Fear & Greed Index, which had soared above 92 last year, now stands at just 17. This reading indicates “extreme fear” among crypto investors.
The recent sell-off has triggered massive liquidations. In a four-hour period, total crypto liquidations surpassed $195 million. Long positions accounted for $161 million of these liquidations.
Institutional investors have been pulling capital from digital assets. The week ending March 7 saw $876 million in outflows from digital asset investment products. This marks the fourth consecutive week of outflows.
Total outflows over this four-week period have reached $4.75 billion. This has reduced year-to-date inflows to just $2.6 billion. Bitcoin specifically lost $756 million in the most recent week.
The total assets under management across digital funds have dropped by $39 billion from their peak. They now sit at $142 billion, the lowest level since mid-November 2024.
Trump
Several factors are driving the current market downturn. President Trump’s recent tariff policies have created uncertainty. He has imposed and partially removed aggressive tariffs on Canada, China, and Mexico in recent weeks.
When asked in a Fox News interview if these tariff policies could trigger a recession, Trump responded that the country will experience a “period of transition.” He suggested that “short-term economic pain is likely.” These comments have worried investors.
Trump’s national crypto reserve plan also disappointed many crypto enthusiasts. Many expected the plan would include large government purchases of Bitcoin. However, Trump announced that the government would only retain cryptocurrencies seized from illicit activities.
Options
The options market has played a role in Bitcoin’s heightened volatility. A Bitfinex Alpha report highlighted that $3 billion in Bitcoin and Ethereum contracts expired last Friday. This drove price swings in the market.
Options realized volatility surged above 80 percent. This signals heightened instability as traders reacted to shifting macroeconomic conditions. Implied volatility jumped 35.7 percent ahead of the recent White House Crypto Summit.
On-chain data revealed heavy losses among traders. Realized losses across market participants hit $818 million per day. February 28 and March 4 ranked among the largest single-day loss events in this market cycle.
Bitcoin’s correlation with traditional markets remains strong. Ruslan Lienkha, Chief of Markets at YouHodler, noted that price trends in Bitcoin and US equities are closely aligned from a medium to long-term perspective.
“The crypto market is unlikely to thrive if the equity market undergoes a correction or downturn,” Lienkha told FXStreet. “Bitcoin is currently perceived by investors as a high-risk asset, often reacting to broader market sentiment even more strongly than traditional financial markets.”
The US bond market is signaling a risk-off environment. This has led to elevated selling pressure in both the equity market and cryptocurrencies. Investor uncertainty has risen over the past week.
Market experts have mixed opinions on Bitcoin’s next moves. Former BitMEX CEO Arthur Hayes expects Bitcoin to drop to $70,000 before a renewed bullish cycle begins. “If it fails at $78,000, $75,000 is next in the crosshairs,” Hayes wrote.
Meanwhile, MicroStrategy has announced plans to raise up to $21 billion. This will be through an 8.00% Series A Perpetual Preferred Stock issuance. The company may use these funds for further Bitcoin acquisitions.
Some analysts argue that Bitcoin’s price follows liquidity trends. M2 money supply, which includes cash, checking deposits, and easily convertible near-money assets, has been recovering after bottoming out. If this trend continues, Bitcoin might start grinding higher in the coming weeks.
Positive economic data and inflation may fuel expectations of monetary easing. Lienkha suggests this could encourage capital inflows into financial markets. This would provide support for crypto prices.
