Bitcoin has recently experienced a significant downturn, falling over 6% from last week’s peak of $81,700. This decline comes amidst growing macroeconomic anxieties that have begun to dominate market discussions. Currently, Bitcoin has breached a crucial support level at $78,000, continuing its slide downward as market-wide liquidations have quickened.
The sentiment in the crypto market, as indicated by the Crypto Fear and Greed Index, has plummeted to 28, indicating a shift back into ‘Fear’ territory after a temporary move to neutral levels in the previous week. A variety of factors have pressured Bitcoin’s price, and traders are increasingly on edge. The sell-off expedited over the weekend, driven by bulls’ inability to defend the important psychological support at $80,000. This triggered forced selling among overleveraged bullish traders, leading to automatic sell orders being executed across various exchanges, which further weakened buy-side liquidity.
Data from CoinGlass highlights that total crypto liquidations surged by 42% in the last 24 hours, reaching nearly $661 million. Bitcoin itself accounted for more than $182 million in liquidations, primarily affecting long trades that amounted to over $160 million, which were rapidly wiped out as prices fell sharply.
Additionally, institutional inflows have notably cooled. Despite a period of consistent inflows, data from SoSoValue shows that U.S. spot Bitcoin ETFs recorded more than $1 billion in net outflows last week. This has been compounded by reports indicating that funds collectively sold close to 13,000 BTC over several trading sessions, signaling a slowdown in institutional accumulation.
Macroeconomic developments are further intensifying concerns surrounding Bitcoin’s price trajectory. Recent data revealed that U.S. consumer inflation rose to 3.8%, while producer prices climbed to 6%. This news has bolstered expectations that the Federal Reserve may maintain elevated interest rates for a longer period than previously expected. Consequently, bond markets reacted sharply, with the U.S. 30-year Treasury yields rising to 5.1%, while the yields on the 10-year and 2-year bonds climbed to 4.6% and 4.1%, respectively. Higher yields traditionally negatively impact Bitcoin and other speculative assets by dampening investor appetite for risk.
The market’s distress is exacerbated by rising oil prices amid escalating geopolitical tensions in the Middle East. Brent crude has surged to around $113 per barrel, and West Texas Intermediate has approached $110, fueled by worries over potential military actions involving Iran, Israel, and the United States. Some analysts believe this surge in crude prices has heightened inflation fears, diverting capital away from high-risk assets like Bitcoin and directing it toward traditional safe havens such as gold and U.S. Treasury bonds.
In terms of technical analysis, Bitcoin’s price chart shows that it has dipped below its major short-term exponential moving averages, indicating that bearish momentum is starting to overshadow the recovery that previously drove the asset above $82,000. Presently, Bitcoin is trading around $76,900, having recently lost the 20 EMA at $78,416, the 50 EMA at $79,274, and the 100 EMA at $79,208. This loss of critical levels within such a brief timeframe has placed sellers back in control.
Additionally, the 200 EMA near $77,833 is weakening as support after Bitcoin briefly dropped below it during the recent downturn. Typically, traders closely monitor the 200 EMA since sustained trading below this level can signal that bullish momentum is waning on larger timeframes. The Relative Strength Index (RSI) is also declining and has approached 32 on the 4-hour chart, nearing oversold territory after remaining at overbought levels earlier this month when Bitcoin rallied toward $82,000. Falling RSI levels coupled with decreasing price action often indicate weakened buying power, and the absence of a strong bullish divergence suggests that sellers might still exert pressure before any significant relief bounce occurs.
Volume activity has surged during the recent decline, especially around large sell-offs near the breakdown below $78,000. Increased sell-side volume during a support breakdown often suggests panic-driven exits rather than strategic profit-taking. From a price structure perspective, Bitcoin is at risk of revisiting the $76,000 range, which recently served as temporary intraday support. Should this level falter, traders will likely turn their attention to the $74,000 to $75,000 area, where Bitcoin found support in late April. On the other hand, any potential recovery would require Bitcoin to reclaim the $78,000 threshold before attempting a push toward the 100 EMA and 50 EMA cluster located around $79,200 to $79,300. A more robust recovery would necessitate Bitcoin moving back above the key psychological $80,000 level, which has recently been a point of heavy selling pressure.
