Market Shockwaves as Bitcoin Plunges Below $84,000
Bitcoin (BTC) suffered a devastating blow on Wednesday, plummeting to $81,000 – its lowest point in four months. The anticipated post-election ‘Trump bump’ has dramatically reversed course, with Trump’s aggressive tariff policies sending shockwaves through crypto markets.
Multiple Factors Behind the Crash
Several key developments have contributed to this dramatic market downturn:
- 20% decline since Trump’s January inauguration
- $2.1 billion in Bitcoin ETF outflows over 6 days
- $2 billion in liquidated long positions
- Growing concerns over inflation and trade tensions
ETF Exodus Intensifies Selling Pressure
The massive outflow from Bitcoin ETFs has become particularly concerning, with Tuesday alone seeing over $1 billion withdrawn from spot Bitcoin funds. Industry leaders Fidelity Bitcoin Fund (FBTC) and BlackRock iShares Bitcoin Trust ETF (IBIT) have been hit especially hard.
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Options Market Signals Further Downside
Traders are actively hedging against further declines, with significant interest in put options at the $70,000 strike price. Data from Deribit shows this represents the second-highest open interest among contracts expiring February 28, with $4.9 billion in total open interest.
Expert Analysis and Market Outlook
Chris Newhouse, director of research at Cumberland Labs, attributes the decline to “tariff policies dampening the outlook and stubbornly high short-term inflation expectations.” The recent Bybit Ethereum hack has further eroded market confidence.
Broader Crypto Market Impact
The bearish sentiment has spread beyond Bitcoin, affecting the entire cryptocurrency ecosystem:
- Ethereum facing increased volatility post-Bybit hack
- Solana surrendering recent gains amid declining memecoin interest
- Perpetual futures seeing significant long position liquidations
Looking Ahead: Market Catalysts
Ravi Doshi of FalconX suggests the market needs a new catalyst to reverse the bearish trend. Currently, BTC is struggling to maintain support at $84,578, with a 4.5% decline in the last 24 hours suggesting further downside potential.
Source: NewsbtC