The cryptocurrency market is once again experiencing sharp price swings. Bitcoin ($BTC ) has dropped below the psychological threshold of $80,000, declining 18.5% over the past week and 6.8% just today (at the time of writing), reaching a low of $78,258. Other major cryptocurrencies, including Ethereum ($ETH ), XRP, and Solana, are also under pressure and at risk of breaking key support levels.

To understand the situation, we need to answer three key questions:

  1. Why did the market drop so sharply?

  2. Where is the bottom that could stop the sell-off?

  3. What can we expect next?

What’s Behind the Drop?

Several factors contributed to the sharp decline in digital asset prices:

  1. Overall decline in financial markets. Leading stock indices in the U.S. and Europe are in a downward trend, causing capital to flow out of risk assets, including cryptocurrencies.

  2. Increasing trade tensions. The introduction of new import tariffs on Mexico, Canada, and China has heightened investor concerns and increased uncertainty in global markets.

  3. Inflationary pressure and Fed policy. Expectations regarding future Federal Reserve decisions are leading investors to reduce Bitcoin holdings amid a potentially stronger dollar and possible interest rate hikes.

Three Key Support Levels

The Relative Strength Index (RSI) signals oversold conditions, with a 14-day reading of 21, down from 45 a week ago. While this could suggest a short-term rebound, uncertainty remains.

  1. $80,000 — broken, with a low of $78,258. A temporary bounce is underway, but Bitcoin ($BTC ) must hold above $85,500 to confirm a potential reversal.

  2. $75,000 — this is a potential consolidation area that could become a reversal point if the decline continues.

  3. $70,000 – $69,000 — key support. This level aligns with the 2021 all-time high and could act as a major reversal point. A drop to this range would mark a 36.6% correction from the peak, which could be seen as a healthy pullback within an ongoing bull trend.

However, a decline to is unlikely unless there is significant panic or worsening macroeconomic conditions. One factor to watch is the March 4 implementation of a 25% tariff on imports from Mexico and Canada, along with an additional 10% levy on Chinese goods.

What’s Next?

The scenarios for further development remain open. Current levels could become the starting point for a corrective rally, but if key psychological and technical barriers fail to hold, the market may retest its lows.

In times of high volatility, it's crucial to stay calm and focus on facts, not emotions. History shows that markets can recover, and each cycle brings new opportunities.

Moreover, the current decline does not indicate a change in the global trend. Rather, the market is going through a phase of finding stable levels before the next move. Cyclicity remains a key feature of cryptocurrencies, and each pullback can open up new opportunities for long-term investors.

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