BTC fell below $80,000, declining 14% in a week. BTC is currently trading at $77,800, and ETH recorded its lowest level since November 2023 at $1,860.
This decline occurred amid increasing market uncertainty, and investment sentiment has reached its lowest level since the 2022 bear market.
Extreme Fear, Triggering BTC Liquidations
The cryptocurrency market sentiment has plunged into extreme fear. The Crypto Fear & Greed Index, which surpassed 92 last year, is currently at just 17. This change reflects widespread market correction due to massive capital outflows from digital assets.
Over the past 4 hours, total liquidations exceeded $195 million, with long positions accounting for $161 million.
The selling pressure suggests traders were caught off guard, and the forced liquidations accelerated the decline in BTC.
Institutional Investors Reducing Positions
Institutional investors have been selling digital assets for 4 consecutive weeks. In the week ending March 7, $876 million was outflowed from digital asset investment products.
This brings the total outflow over the past 4 weeks to $4.75 billion, reducing the inflow since the start of the year to $2.6 billion. BTC was the main target, losing $756 million.
The total assets under management of digital funds have now decreased by $39 billion from the peak, currently at $142 billion, the lowest since mid-November 2024.
Moves by the US government have intensified the selling pressure. President Trump's new tariffs imposed on Canada, Mexico, China, and potentially the EU have pushed institutional investors away from risky assets like cryptocurrencies.
"The movements in crypto and equities are becoming increasingly unidirectional. Down days see very large declines, and the opposite is also true. This is another signal of a shift in risk appetite. Sentiment is the ultimate driver of prices." wrote The Kobeissi Letter.
Additionally, President Trump's remarks at the White House cryptocurrency summit on Friday introduced further uncertainty.
He confirmed a plan to use BTC seized by the government, but said they will not make additional purchases, weakening market confidence and triggering more selling.
BTC, What's Next?
Market experts have divergent views on BTC's next move. Former BitMEX CEO Arthur Hayes expects BTC to drop to $70,000, followed by a new upward cycle.
"The start of the week is not looking good. BTC will likely retest $78,000. If it fails, $75,000 is the next target. There is a lot of open interest option contracts between $70,000 and $75,000. If it gets into that range, it will get violent." wrote Arthur Hayes.
Meanwhile, MicroStrategy announced a plan to raise up to $2.1 billion through the issuance of 8.00% Series A Perpetual Preferred Stock, which could be used for additional BTC purchases.
Some analysts argue that BTC price follows the liquidity trend. M2 money supply, which includes cash, demand deposits, and easily convertible near-money assets, has bottomed and is recovering.
"Some argue that liquidity, as measured by M2 money supply, is the actual driver of BTC price. M2 money supply has bottomed and is recovering rapidly. If this is true, we could see BTC start to rise in the coming weeks." – Analysts at Crypto Stream wrote.
However, skeptics warn that not all M2 liquidity will flow into cryptocurrencies.
Currently, BTC is under pressure, and the next few weeks will determine whether this decline continues or sets the stage for a new upward trend.
