Bitcoin has dropped below $80,000, marking a 14% drop in a week. The leading cryptocurrency is currently trading at $77,800, while Ethereum has fallen to $1,860 – it’s lowest since November 2023.
This downturn comes amid rising market uncertainty, with sentiment hitting levels not seen since the 2022 bear market.
Extreme Fear is Driving Bitcoin Liquidations
Crypto market sentiment has plunged into extreme fear. The Crypto Fear & Greed Index, which soared to 92+ last year, now stands at just 17. This shift reflects a broad market correction fueled by significant capital outflows from digital assets.
In the past four hours, total liquidations have surpassed $195 million, with long positions accounting for $161 million.
The sell-off suggests traders were caught off guard, leading to forced liquidations and accelerating Bitcoin’s decline.
Institutional Investors Cut Exposure
Institutional investors have been offloading digital assets for four consecutive weeks. The week ending March 7 saw $876 million in outflows from digital asset investment products.
This brings the four-week total to $4.75 billion, slashing year-to-date inflows to just $2.6 billion. Bitcoin bore the brunt of these outflows, losing $756 million.
Total assets under management across digital funds have now dropped by $39 billion from their peak. It’s now sitting at $142 billion—the lowest since mid-November 2024.
US policy moves have intensified selling pressure. President Trump’s new tariffs on Canada, Mexico, China, and potentially the EU have driven institutional investors away from risk assets like crypto.
“The moves in crypto and stocks are becoming increasingly one-sided. Red days are DEEP red days and vice-versa, yet another sign of changing risk appetite. Sentiment is the ultimate driver of price,” wrote the Kobeissi Letter.
Additionally, Trump’s remarks at Friday’s White House Crypto Summit triggered further uncertainty.
He confirmed plans for a US Bitcoin Reserve, stating that the government will use seized BTC but will not make additional purchases. This dampened market confidence, leading to further sell-offs.
What’s Next for Bitcoin?
Market experts have mixed opinions on Bitcoin’s next move. Former BitMEX CEO Arthur Hayes expects Bitcoin to drop to $70,000 before a renewed bullish cycle begins.
“An ugly start to the week. Looks like BTC will retest $78,000. If it fails, $75,000 is next in the crosshairs. There are a lot of options OI struck between $70,000 to $75,000. If we get into that range it will be violent,” wrote Arthur Hayes.
Meanwhile, MicroStrategy has announced plans to raise up to $21 billion through an 8.00% Series A Perpetual Preferred Stock issuance, potentially using the funds for further Bitcoin acquisitions.
Some analysts argue that Bitcoin’s price follows liquidity trends. M2 money supply has been recovering after bottoming out.
M2 money supply includes cash, checking deposits, and easily convertible near-money assets, reflecting overall liquidity in the economy.
“Some argue that liquidity—measured through M2 money supply—is the real driver of Bitcoin’s price. M2 money supply bottomed and has been recovering sharply. If this holds true, we should see Bitcoin start grinding higher in the coming weeks.” wrote analysts at Crypto Stream.
However, skeptics caution that not all M2 liquidity translates into crypto inflows.
For now, Bitcoin remains under pressure, and the coming weeks will determine whether this dip extends further or sets the stage for a fresh rally.
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