Original title: “The crypto market collapses in the early morning, and Bitcoin’s worst case scenario will fall to $80000?”

Original author: Lawrence, Mars Finance

At 3:15 a.m. Beijing time on February 19, the bitcoin price suddenly collapsed to US$93,300, setting a new low in the past two weeks. Although it subsequently rebounded to US$95,400, this volatility was astonishing and had a great impact on the market.

The 14-hour violent fluctuations plunged the derivatives market into a bloody storm. According to Coinglass data, in the past 24 hours, 142,439 investors around the world have sold positions, with a total amount of US$344 million. The violent turmoil in the market triggered panic among investors and also exposed the fragility of the cryptocurrency market.

Differentiation of core asset performance

The encryption index shows that the market showed significant stratification in this round of adjustment: 

Bitcoin: Although it suffered a 3.2% weekly decline, it was still above the 120-day moving average (approximately $93000).

Ethereum: It hit a key psychological level of $2,600 (down 9.1% from its weekly high), and is currently recovering to $2,660, with 30-day volatility expanding to 47% 

Altcoin rout: Solana (SOL) plunged 20% to as low as $160, currently quoted at $169, and has lost all gains since January 13.DOGE fell to 0.24, while XRP struggled to hold support around $2.47.

LIBRA incident affects market sentiment

Macroeconomic uncertainty continues to affect the cryptocurrency market, and the LIBRA Memin “scam” incident has exacerbated this downturn.

QCP Capital’s crypto options trading department pointed out when analyzing the market:“Due to the weak performance of ETH and other altcoins, Bitcoin’s dominance has risen to 60%, the highest level in four years. The recent LIBRA scandal involving Argentine President Javier Millay has also eroded confidence in altcoins and memecoins.”

In addition, since the Federal Reserve suspended its hawkish interest rate policy in January, Bitcoin’s upside has been limited. Federal Reserve Governor Patrick Huck recently maintained a hawkish stance, saying that he would continue to stabilize interest rates until inflation was brought under control. This bearish sentiment has kept Bitcoin prices below $100,000 for the past two weeks, but Bitcoin’s market dominance (BTC.D) has risen to more than 60%, further suppressing the altcoin’s rebound.

Analyst Jamie Coutts believes the market may experience another rally before Bitcoin may rebound.

Bitcoin cross-exchange flow pulse turns bearish

Pulse chart of flows between Bitcoin exchanges. Source: CryptoQuant

According to analysis by chain analyst n,Bitcoin’s inter-exchange flow pulse (IFP) has turned negative, indicating a decline in risk appetite among potential investors. The IFP indicator measures the flow of Bitcoin between the spot and derivatives markets. Historical data shows that when markets go up and investor sentiment is high, more bitcoin moves from spot to derivatives markets. When the market weakens, Bitcoin will flow out of the futures market and flow into the spot exchange, indicating investors ‘expectations for a downward price.

On February 16, the IFP indicator turned negative for the first time since the third quarter of 2024, indicating that market sentiment may be shifting. Bitcoin researcher Axel Adler Jr also pointed out that the liquidation of long positions in Bitcoin futures has reached its highest level in two years.This is similar to the situation in January 2022, when the liquidation of long positions marked the beginning of a bear market.

Leading chart for long-short clearing of Bitcoin futures. Source: www.gushiio.com

Still, Adler said the market responded to the pressure, indicating that buyers remained active during the adjustment period and were “buying on dips”, limiting the extent of Bitcoin’s downside.

For bulls, though, things are not completely out of control, as Adler added,

“Currently, the market is fully responding to this pressure, which actually indicates strong demand during the adjustment period. Buyers are actively buying on dips, limiting the depth of Bitcoin’s decline.”

Bitcoin’s worst case scenario will fall to around $80,000

Bitcoin has been consolidating in the $95,000 to $99,000 range since February 3, and the $95,000 support level has been tested five times in the past two weeks. Continued support testing may weaken the effectiveness of the range and increase the risk of breaking support. As a result, Bitcoin may close below $95,000 for the first time in subsequent transactions.

If support falls, prices could drop further into the range between $91,130 and $88,909. If the market becomes bearish further, the price could pull back to between $81,699 and $85,160, which was the price range during Bitcoin’s early “Trump Rise” rally.

The daily deficit for CME remains between $77,000 and $80,000, which could be the worst case for Bitcoin, meaning the price of Bitcoin could fall further by 15%.

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