Bitcoin struggles to reach $70,000 as it heads for worst Q1 since 2018

Bitcoin is struggling to stay above $70,000, a level it briefly broke over the weekend, as a lack of catalysts coupled with macro-driven factors are keeping the price stagnant in the mid- to high $60,000s.

Bitcoin is down over 14% in February, and if it closes the month in the red, that will be its fifth consecutive monthly loss and its worst Q1 since 2018, CoinGlass data shows.

“Market cap compression has matured; volatility has declined; participation has thinned. This is a grinding phase. The next impulse will likely be violent, whichever direction it resolves,” Timothy Misir, head of research at Blockhead Research Network, said.

Misir added that the unrealized losses across the network represent 16% of bitcoin’s total market cap, a pain profile similar to early May 2022.

Kyle Rodda, senior financial analyst at Capital.com, told Sherwood News that two big levels stand out for him.

“The first is major support at $60,000, which is the most recent lower low. Second is previous support and possible resistance at $74,000. The trend looks negative, and the price action hints at another possible break lower to test $60,000. But a push above $74,000 would negate some of that bearishness and maybe allay fears BTC is heading lower from here,” Rodda said.

Looking ahead, Rodda said he’s watching Friday’s inflation data because it might provide “a touch of support beneath what is an otherwise pretty strong downtrend” for bitcoin.

“Obviously, the nasty scenario would be if it comes in a bit spicy and casts doubt about the depth and timing of rate cuts. Should that happen, it’ll add to bitcoin’s list of woes,” Rodda said.

Meanwhile, Glassnode analysts said bitcoin’s recent drop to $60,000 “imposed drastic psychological pressure on ‘diamond hands,’ comparable to the May 2022 LUNA crash.”

“Simply put, long-term holders realized significant losses — a rare shift in conviction typically seen in deeper stages of bear markets,” they wrote on X.

Bloomberg Intelligence macro strategist Mike McGlone posted an even more bearish outlook on X that the “crypto bubble is imploding,” and bitcoin could “revert to $10,000.”

Not everyone agrees with McGlone’s bleak scenario.

Shawn Young, chief analyst at MEXC Research, told Sherwood he doesn’t believe projections that call for a retest of the $10,000 level. 

“The fundamentals remain — and even though mass acquisitions have slowed, the current buying activity outweighs the coins mined daily. The first crucial sign would be bitcoin reclaiming the $80,000 resistance. If this happens and it stays above that level for a few weeks, a return to $100,000 is likely,” Young said.

Finally, Bitfinex analysts told Sherwood that there is a lack of upward momentum, even though implied volatility has dropped, and de-leveraging is running out of steam.

“But funding rates have yet to show appetite for aggressive re-leveraging and derivatives markets support the view of a stabilization rather than renewed buying,” they said.