Bitcoin has dropped below $80K, fueling pessimism among investors. Over the past 24 hours, the leading cryptocurrency fell by more than 4%, and over the past week, it has lost over 11%. According to Coinglass, total liquidations in the market reached $956 million, with $241 million coming from long BTC positions.
Reasons for the Decline: Macroeconomics and Uncertainty
The cryptocurrency market downturn began after U.S. President Donald Trump signed an executive order to create a national Bitcoin reserve. However, traders were disappointed by the lack of immediate BTC purchases. Instead, the government plans to fund the reserve using confiscated digital assets, which raised skepticism among investors.
Additional pressure on the market comes from traditional financial concerns. JPMorgan increased the probability of a U.S. recession from 30% to 40%. Investors' fears escalated after Trump hinted at the possibility of an economic downturn.
"This transition period is necessary for long-term growth, but challenges may arise in the short term," Trump told Fox News.
Another contributing factor is global trade tensions. On Monday, China imposed retaliatory tariffs on U.S. agricultural goods, triggering a sell-off in the stock market. The S&P 500 and Nasdaq indices fell sharply, impacting cryptocurrencies as high-risk assets.
Moreover, the U.S. Federal Reserve (Fed) maintains a cautious stance on interest rate cuts. Fed Chair Jerome Powell stated that further rate adjustments depend on economic data. A weak U.S. jobs report released on Friday further intensified uncertainty.
Market Reaction and Predictions
According to Coinglass, major BTC holders (whales) are reducing their positions. The number of large transactions dropped from 25,860 to 17,290, indicating declining institutional interest.
Technical indicators suggest further downside potential. Analysts identify $75K as the next key support level. If this level fails, Bitcoin could test $64K.
BitMEX founder Arthur Hayes predicts BTC could drop to $70K. He compares the current situation to previous bull market corrections and advises waiting for a deeper decline before increasing positions.
"Only after central banks loosen monetary policy can we expect a real bull rally," Hayes noted, referring to the Fed, the European Central Bank (ECB), and the Bank of Japan (BOJ).
Despite the bearish sentiment, some analysts believe the decline may be short-lived. CNBC host Jim Cramer reminds investors that markets typically find a "safety cushion" and tend to recover after major sell-offs.
