Summary:
Bitcoin's price dropped from $96,131 to a local bottom of $85,418, triggering $1.5 billion in liquidations.
Despite bearish trends, Andre Dragosch indicates a contrarian buy signal for BTC.
US spot Bitcoin ETFs saw their largest daily net outflow on record, reflecting market sentiment.
Crypto whales are capitalizing on the market downturn, accumulating nearly 20,400 BTC.
Analysts warn of potential further downside for BTC, with current trading at $87,086.
Bitcoin's Recent Price Pullback
Bitcoin (BTC) has faced one of its most significant price declines recently, dropping from $96,131 on February 24 to a potential local bottom of $85,418. This downturn has resulted in liquidations exceeding $1.5 billion, predominantly affecting long positions.
Is It Time To Buy Bitcoin?
The recent price movements indicate that the cryptocurrency market is reacting to unfavorable macroeconomic conditions, influenced by US President Donald Trump’s proposed trade tariffs and a hawkish stance from the US Federal Reserve (Fed). The total crypto market capitalization has fallen below $3 trillion, marking a shift towards a bearish sentiment for risk-on assets, with major altcoins like Ethereum (ETH) declining by over 10% in the past week.
Despite the downturn, overall sentiment towards the crypto market is showing signs of improvement. Andre Dragosch, European Head of Research at Bitwise, suggests that the worst may be over for BTC. He shared the Cryptoasset Sentiment Index, which indicates a strong contrarian buy signal for Bitcoin. Dragosch noted that:
“Widespread bearishness among flows, on-chain, and derivatives data implies that downside risks are fairly limited. Risk-reward appears to be quite favorable at these prices.”
Market Sentiment and Whale Activity
To highlight the bearish sentiment surrounding risk-on assets, Dragosch pointed out that US spot Bitcoin exchange-traded funds (ETFs) faced their largest daily net outflow on record. Additionally, the Crypto Fear & Greed Index remains in bearish territory, with sentiment levels as pessimistic as during the macro capitulation last August when BTC hit a local bottom of $49,000 before surging to new all-time highs.
On a positive note, on-chain data reveals that crypto whales are taking advantage of market uncertainty, with long-term holders accumulating nearly 20,400 BTC post-sell-off.
Impact on Strategy Stocks
Alongside BTC's decline, MSTR (MicroStrategy) has also suffered, plummeting 55% from its peak of $543 in November 2024, currently trading at $249, down approximately 29% over the past month.
Despite the prevailing bearish sentiment, recent analyses show that while Bitcoin's cumulative annual growth rate has slowed, it continues to outperform traditional assets like gold and stocks.
However, not all analysts share Dragosch's optimism; Standard Chartered has warned that BTC may face further declines before resuming its bullish trajectory. As of now, BTC trades at $87,086, down 1% in the past 24 hours.
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