Bitcoin Plummets Below $70K as Market Sentiment Crashes Into “Extreme Fear” Zone

By Francisco Rodrigues (All times ET unless indicated otherwise)

Bitcoin has suffered a brutal third consecutive day of losses, plunging below the critical $70,000 psychological barrier after a weekend recovery attempt fizzled out. The cryptocurrency market is now gripped by “extreme fear” according to the Crypto Fear and Greed Index, as traders brace for potentially deeper losses.

Market Meltdown Intensifies

The broader crypto market capitalization has taken a significant hit, sliding to approximately $2.28 trillion. The CoinDesk 20 (CD20) index led the carnage with a staggering 3.4% drop over the past 24 hours. This represents one of the sharpest single-day declines we’ve seen in recent weeks, sending shockwaves through the entire digital asset ecosystem.

What makes this downturn particularly concerning is that it’s occurring despite relatively light spot trading volumes. According to on-chain data aggregator Glassnode, the current pullback remains “modest by past standards,” with no signs of the panic selling that typically accompanies previous cycle peaks. However, market participants remain on edge as Bitcoin struggles to find solid footing.

ETF Inflows Provide Temporary Lifeline

In a surprising twist, spot bitcoin ETFs have shown remarkable resilience, recording steady inflows over the past three days. This consistent demand has helped absorb some of the selling pressure that would otherwise have sent prices spiraling further downward. The market appears to be entering a crucial “price discovery phase,” according to analysts at Wintermute.

“With spot volumes still relatively light, leverage is driving short-term moves as was illustrated by BTC squeezing back up from the lows last Friday on the back of heavily crowded perp shorts,” wrote Wintermute desk strategist Jasper De Maere in an emailed note. “It’s likely the market will continue to whip across this range as it’s still in price discovery.”

Institutional Voices Attempt to Calm Nerves

Despite the market carnage, several high-profile figures in the crypto space remain surprisingly bullish. At Consensus Hong Kong, Tom Lee, chief investment officer of Fundstrat and chairman of ether treasury firm BitMine Immersion (BMNR), delivered a message of cautious optimism to investors.

Lee advised market participants to “stop timing the bottom and start buying the dip,” suggesting that current price levels represent attractive entry points for long-term investors. His comments came as Bitcoin traded around $66,000, representing a significant discount from its recent highs above $73,000.

Meanwhile, Michael Saylor, executive chairman of bitcoin treasury firm Strategy (MSTR), doubled down on his ultra-bullish stance during an appearance on CNBC. Saylor reiterated his long-term bet on the cryptocurrency, declaring that he expects Bitcoin to outperform traditional equities despite the current drawdown.

“We won’t be selling Bitcoin, we’ll be buying every quarter forever,” Saylor stated emphatically, reinforcing his commitment to the digital asset as a treasury reserve asset.

Macroeconomic Headwinds Compound Crypto Woes

The crypto market isn’t operating in isolation, and recent macroeconomic developments have added fuel to the bearish fire. Weak U.S. retail sales data has moderately lifted expectations for Federal Reserve interest rate cuts, which has simultaneously weighed on the U.S. dollar. This dynamic creates a complex environment for risk assets like cryptocurrencies.

Traders are now laser-focused on today’s nonfarm payrolls figures and inflation data, which could significantly influence risk appetite across all markets. A stronger-than-expected jobs report could dampen rate cut expectations and potentially provide some support for the dollar, while weaker data might further pressure the greenback and provide relief for crypto assets.

Technical Analysis: Critical Support Under Siege

From a technical perspective, Bitcoin is currently hovering precariously below the 200-week exponential moving average (EMA), a critical support level that has historically provided strong buying interest during market downturns. The breach of this level has many technical analysts sounding alarm bells.

“The market now awaits the weekly close to confirm whether this breach marks a definitive breakdown or a temporary deviation,” noted one prominent technical analyst. “If Bitcoin cannot reclaim this level in the coming days, we could see accelerated selling as algorithmic trading systems and momentum traders pile on the bearish momentum.”

Key Events and Data to Watch

For those navigating these turbulent waters, several key events and data releases could provide important market signals:

Crypto Events:

• Feb. 11: Immutable to complete the merge of Immutable X and Immutable zkEVM

Macroeconomic Data:

• Feb. 11, 8:30 a.m.: U.S. nonfarm payrolls for January (Est. 70K, Prev. 50K)
• Feb. 11, 8:30 a.m.: U.S. unemployment rate for January (Est. 4.4%, Prev. 4.4%)
• Feb. 11, 8:30 a.m.: U.S. average hourly earnings for January YoY (Est. 3.8%, Prev. 3.6%)

Token Events:

• Feb. 11: AVAX to unlock 0.32% of its circulating supply worth $14.33 million
• Feb. 11: Coinbase to list RaveDAO (RAVE), DeepBook (DEEP), and Walrus (WAL)

Market Performance Snapshot

The carnage extends well beyond Bitcoin:

• BTC: Down 3.14% at $66,868.63
• ETH: Down 2.96% at $1,947.84
• CoinDesk 20: Down 2.75% at 1,900.89
• BTC Dominance: 59.12% (-0.29%)
• Ether-Bitcoin Ratio: 0.02914 (-0.81%)

Traditional markets are also feeling the pressure, with the S&P 500 closing down 0.33% and the Nasdaq Composite falling 0.59%. The flight to safety is evident in gold futures, which surged 1.73% to $5,117.80 per ounce.

Crypto Equities Take a Beating

The pain isn’t limited to spot markets, as crypto-related equities have also experienced significant selling pressure:

• Coinbase Global (COIN): Closed at $162.51 (-2.83%)
• MARA Holdings (MARA): Plunged 4.96% to $7.66
• Riot Platforms (RIOT): Dropped 0.94% to $14.83
• Strategy (MSTR): Fell 3.93% to $133.00

ETF Flows: A Glimmer of Hope

Despite the market turmoil, spot Bitcoin ETFs have recorded daily net inflows of $166.5 million, bringing cumulative net flows to an impressive $54.98 billion. Total Bitcoin holdings in these products now stand at approximately 1.27 million BTC, representing a significant portion of the circulating supply.

Spot Ethereum ETFs have also seen positive flows, with $13.8 million in daily net inflows and cumulative flows reaching $11.91 billion.

What’s Next for Crypto Markets?

As the market digests this latest downturn, several scenarios could play out in the coming days:

1. V-shaped Recovery: If the macroeconomic data disappoints and rate cut expectations increase, we could see a quick rebound in risk assets, including cryptocurrencies.

2. Further Downside: A strong jobs report could reinforce the narrative of a resilient economy, potentially leading to additional selling pressure in crypto markets.

3. Consolidation: The market may enter a period of sideways trading as participants reassess their positions and wait for clearer signals from both technical and fundamental factors.

The coming days will be crucial in determining whether this represents a healthy correction within a broader bull market or the beginning of a more significant downturn. Traders and investors would be wise to monitor both crypto-specific developments and broader market indicators as they navigate these uncertain waters.

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