Yesterday, Bitcoin suddenly plummeted to around $86,000, directly triggering a chain reaction across the entire cryptocurrency market, resulting in $1.06 billion in liquidations, with long positions losing as much as $873 million!
According to Coinglass data, up to 225,000 traders were liquidated in the past 24 hours, with open contracts decreasing by 5%, indicating that the market is undergoing large-scale deleveraging. More concerning is the 14% increase in inflows to exchanges, which may suggest that more panic selling is on the way. The funding rate also briefly turned negative, reflecting a clear shift in investor sentiment.
The U.S. Bitcoin spot ETF has also not been immune, with total outflows reaching $1.1 billion in the past five days, including a loss of $539 million in just one day on February 24.
Crypto-related stocks also suffered a short-term hit yesterday: Coinbase (COIN) fell by 6.4%, Robinhood (HOOD) dropped by 8%, and Bitcoin miners Bitdeer (BTDR) and Marathon Digital (MARA) plummeted by 29% and 9%, respectively.
According to on-chain data from IntoTheBlock, currently, 12% of all Bitcoin addresses are in a state of loss, the highest percentage of losses since October 2024. Many investors who bought near the historical high of $108,000 are now in a loss position, increasing the risk of selling.
Meanwhile, in just the past week, Bitcoin whales have sold over $1.2 billion worth of Bitcoin, further accelerating the risk of market decline.
Analysts believe that Bitcoin's decline is largely triggered by worsening macroeconomic conditions. First, Trump's proposal to impose tariffs on Canada and Mexico has heightened concerns about inflation and economic stagnation. Meanwhile, geopolitical tensions between the U.S. and China, particularly semiconductor trade restrictions, have further weakened market risk appetite.
The traditional financial markets in the U.S. were also not spared yesterday, with the Nasdaq Composite Index falling by 2.8% and the S&P 500 Index dropping by 2.1%. Risk aversion has increased and the U.S. dollar index has strengthened, which typically puts pressure on high-risk assets like Bitcoin.
In summary, the view is that the daily support level of $88,000 is crucial for Bitcoin. If this level is broken, it could trigger a new round of liquidations. At the same time, although market volatility remains high, traders still view $90,000 as a potential recovery level.
What do you think? Is this Bitcoin crash a temporary pullback, or the beginning of a larger decline? Would you choose to buy the dip or sit on the sidelines?