Analysis of the reasons for Bitcoin's recent sharp decline
1. Multiple adverse events overlapping
Hacker attacks and exchange security crises: The Bybit exchange was hacked on February 21, losing $1.5 billion worth of ETH and stETH (one of the largest thefts in history), sparking a crisis of trust in the security of centralized exchanges. The hacker's dumping of stolen assets further exacerbates short-term selling pressure.
Technical breakdown and leverage liquidation: Bitcoin fell below the key support level of $92,000, triggering programmatic stop-losses and leverage liquidations. More than $900 million was liquidated across the network in the past 24 hours, with 92% being long positions, forming a vicious cycle of 'long liquidation.'
Macroeconomic and policy uncertainty: South Dakota in the U.S. has delayed a bill allowing state funds to invest in Bitcoin, signaling tighter regulation; rising expectations of Federal Reserve interest rate hikes have led to a stronger dollar, putting pressure on risk assets. The Trump administration's trade protection policies have also intensified market risk aversion.
2. Market sentiment and funding deterioration
Fear index drops to 25: The cryptocurrency fear and greed index plummeted from 'neutral' to 'extreme fear,' undermining investor confidence.
Reversal of capital flows: Continuous outflows from Bitcoin ETFs and accelerated institutional capital withdrawal; the altcoin market faces sustained selling pressure due to token unlocks (e.g., Solana will unlock $1.72 billion in tokens).
3. The chaos of Memecoins and the bursting of speculative bubbles
Trump-related Memecoins (e.g., TRUMP coin) have plunged over 80%, and projects associated with the Argentine president, like Libra, have collapsed in value, weakening market expectations for policy benefits.
The overall decline in the Memecoin sector reached 20%-35%, with high-leverage speculative funds fleeing, exacerbating market volatility.
Bottom-fishing opportunity assessment
1. Observation of short-term risks and support levels
Key support range: Bitcoin's current price is around $88,000-$89,000; if it falls below, it may test $85,000; Ethereum needs to hold the $2,300 support.
Verification of stop-loss signals: Need to observe whether it can rebound above $90,000 within 24 hours, and whether the fear index can rise back to neutral territory.
2. Long-term fundamentals remain unchanged
Halving cycle effect: Historical patterns show that after the halving in 2024, bull markets usually last for 12-18 months (i.e., into mid-2025), and the current pullback (about 10%) is still considered a normal adjustment.
Institutional and policy support: The Trump administration's assessment of establishing a Bitcoin strategic reserve and withdrawing the SAB 121 bill that restricts banks from custodying crypto assets is still a long-term positive.
3. Strategy suggestions
Building positions in batches: Phase allocations below $88,000, avoiding one-time bottom fishing.
Focus on anti-dip assets: Prioritize assets with clear technological iterations (e.g., ETH upgrades) or RWA (real-world asset tokenization) tracks, avoiding purely speculative meme coins.
Buffett and the possibilities in the digital currency market
1. Indirectly layout the cryptocurrency ecosystem
Berkshire has entered the cryptocurrency custody business by investing in the Brazilian digital bank Nu Holdings (holding a $1.2 billion stake), which supports trading in BTC, ETH, and more.
This move reflects Buffett's recognition of the application prospects of blockchain technology, but he does not directly hold Bitcoin and continues to maintain a strategy of 'indirect participation through compliant institutions.'
2. Intention to hoard cash
Berkshire currently holds $325 billion in cash, primarily to respond to market fluctuations and capture undervalued asset opportunities, rather than for short-term speculation.
Although Nu Holdings' business involves cryptocurrency, Buffett has repeatedly criticized Bitcoin for having 'no intrinsic value,' making the probability of direct large-scale investment low.
3. Potential variables
If Bitcoin is included in the U.S. strategic reserve or institutional adoption accelerates, it may prompt Berkshire to adjust its strategy, but clear policies and technological maturity are needed.
Conclusion
The recent sharp decline is the result of multiple adverse factors resonating, but the bull market fundamentals remain unchanged. The vicinity of $88,000 may be a reasonable observation range for risk-reward ratios. Although Buffett has indirectly entered the crypto ecosystem through Nu Holdings, barriers to direct investment still exist, requiring attention to policy and technological breakthroughs. Investors should control leverage and focus on long-term value tracks.
