Crypto
Bitcoin Continues Months-Long Steep Decline In Value
No customers for the bitcoin ATM (Justin Sullivan/Getty Images)

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

If bitcoin ends February in the red, it will be its fifth consecutive monthly loss, and one analyst says bitcoin could “revert to $10,000.”

Yaël Bizouati-Kennedy

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.

btc 60K support
(Kyle Rodda/Capital.com)

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, itll add to bitcoins 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.

BTC chart
(Glassnode)

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.

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Hyperliquid reclaims all-time high

HYPE, the native token powering perpetuals exchange Hyperliquid and its underlying blockchain, rebounded to reclaim its all-time high previously set at the start of the month.

Treasury firms Hyperliquid Strategies and Hyperion DeFi have also rallied as the token increased double digits in the last 24 hours to trade as high as $76.70, rising past its record price set nearly two weeks ago, according to CoinGecko. In the interim between all-time highs, HYPE pulled back to around $53.

The token has several tailwinds, the first coming from ETF flows. Since their inception in May, HYPE ETFs have yet to record negative weekly outflows, posting a cumulative total net inflow of $171.8 million, per SoSoValue.

The second comes from Hyperliquid spending basically everything it earns in fees to buy HYPE, a mechanism embedded into the protocol’s codebase.

The venue’s buyback funding mechanism is set to add a new source of yield. Validators of the network activated “AQAv2,” which means stablecoin deployers will share about 90% of reserve yield revenue on their supply within the protocol.

Around $6.1 billion of Circle’s USDC resides in Hyperliquid, per DefiLlama. Accrual begins on August 26 and the first payment is made on October 3, the network announced in its Discord channel last week.

A substantial amount of capital is riding on different positions of HYPE. In total, a move down to under $53 would result in the liquidation nearly 1.8 million HYPE worth of leveraged long positions on the on-chain perps venue, or $131.7 million, data from CoinGlass shows. For the upside, a climb above $100 results in the liquidation of more than 3 million worth of leveraged HYPE short positions, or $221.5 million.

HYPE’s rebound to all-time high comes after Michael Selig, chair of the Commodity Futures Trading Commission, defended his agency’s decision to approve regulated perpetuals, or futures contracts without expiration dates, CNBC reported on Monday.

Last month, the CFTC approved bitcoin perpetual futures trading in the US through regulated prediction markets firm Kalshi and an affiliate of centralized exchange Coinbase.

“Perps are highly likely to become lightly regulated and thus approved in the US,” said David Pakman, head of venture investments at CoinFund.

“We expect to see perps for many different types of assets, from commodities to equities,” Pakman told Sherwood News.

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Crypto market snaps back as sentiment lifts, with altcoins from ethereum to XRP soaring

The market capitalization of the crypto industry has jumped around $83.2 billion in the last 24 hours, with privacy-focused token Zcash and worldcoin, the native cryptocurrency of the network backed by OpenAI CEO Sam Altman, leading market gains, jumping over 22%.

But the last 24 hours have been good across the board:

Investors have been eager to see some positive signs around the Iranian conflict ending, coupled with hopeful outlooks around the CLARITY act, both breathing some life into assets, Kairos Research cofounder Ian Unsworth told Sherwood News.

Simon Shockey, a crypto strategist at crypto wallet infrastructure firm Privy, said the upswing stems from several things converging. He pointed to how alt markets broadly were very oversold following the bug found in Zcash that shook confidence.

Friday, Zcash founder Zooko Wilcox said Anthropic didn’t find any more serious bugs with the Zcash protocol after Shielded Labs requested the AI firm run a security audit of the network with Mythos.

Shockey added that the pool of willing sellers has dwindled. Even if structurally, AI is a much more compelling and asymmetric bet in the eyes of allocators, many of these crypto assets have simply run out of marginal sellers despite some shorter-term narrative-driven pumps. The only people left to sell at this point are the teams themselves and VCs.

Net-net: oversold conditions plus exhausted seller bases plus a macro backdrop thats stabilized equals a snapback, especially in names that have real usage or community conviction behind them,” Shockey told Sherwood.

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