Bitcoin’s price continues its downward trajectory, falling below $80,000 on Friday and marking a weekly decline exceeding 15%. This significant correction has erased approximately $660 billion in total cryptocurrency market capitalization and triggered $3.68 billion in liquidations across the sector.
The cryptocurrency market’s recent volatility was largely fueled by a massive security breach at the Bybit exchange.Hackers made off with approximately $1.4 billion in digital assets, making it the largest crypto hack in history—more than double the size of the previous record holder, PolyNetwork’s $611 million hack in August 2021.
This security incident severely damaged market confidence and led to substantial withdrawals from Bybit’s reserves.CryptoQuant data shows the exchange lost around $2 billion in Bitcoin from its reserves between Friday and Tuesday, with approximately 20,190 BTC withdrawn during this period. The exchange’s decision to keep withdrawal functions operational following the Ethereum hack contributed to this exodus, as investors rushed to secure their assets amid growing uncertainty.
The Crypto Fear and Greed Index, which measures overall market sentiment, plummeted to a score of 10 on Thursday—near a three-year low—indicating “extreme fear” among investors. This dramatic shift in sentiment reflects growing concerns about market stability following the hack.
Industry experts suggest this correction could particularly impact short-term investors seeking quick profits. According toAnton Chashchin, CEO of N7 Capital, “If short-term investors face losses, they are unlikely to hold their positions for long.” However, he also noted that the extreme fear reading could signal an imminent market reversal.
Market research indicates that Bitcoin’s price volatility was exacerbated by offshore perpetual futures traders attempting to “buy the dip” with leveraged positions. A K33 Research report highlighted that these traders were quickly punished for this approach, with long liquidations amplifying the downward price movement.
From Monday to Friday, the crypto market experienced a staggering $3.68 billion in total liquidations, with Bitcoin alone accounting for $1.75 billion of this figure, according to Coinglass data.
Adding to market pressure, Bitcoin spot Exchange Traded Funds (ETFs) recorded substantial outflows totalling $2.48 billion through Thursday. This continued selling from institutional investors represents a significant shift in market dynamics that could lead to further price corrections if the trend persists.
Agne Linge, Head of Growth at WeFi, observed that major institutional players, including Fidelity, Ark, Grayscale, and BlackRock, executed notable Bitcoin sell-offs on Thursday. Particularly concerning was BlackRock’s transfer of 5,100 BTC to Coinbase, potentially signalling an imminent $400 million liquidation.
The cryptocurrency sell-off has been further influenced by broader macroeconomic factors, including President Trump’s announcement of 25% tariffs on imports from Canada, Mexico, and the European Union, set to take effect on March 4. These tariff policies have contributed to what some analysts describe as “whispers of stagflation” in the market.
Consumer confidence data has already shown signs of weakness, with the Consumer Confidence Index falling short of expectations (98 vs. 103 expected). Meanwhile, short-term inflation expectations remain elevated, creating additional uncertainty in the market.
From a technical analysis perspective, Bitcoin broke below several key support levels this week. After falling through the $94,000 support on Monday and the $85,000 level on Wednesday, BTC was trading around $79,500 by Friday.
The daily chart’s Relative Strength Index (RSI) reading of 20 indicates oversold conditions, which could potentially signal an upcoming reversal or bounce. However, traders should remain cautious as the RSI could stay below oversold levels during continued market corrections.
If the current downtrend persists, Bitcoin could test its next support level at $73,000. Alternatively, any recovery would likely face resistance around the $85,000 level.
Disclaimer: This information is for general knowledge and informational purposes only and does not constitute financial,investment, or other professional advice.
