Bitcoin Falls Below $80,000 Again: Temporary Correction or Start of a Bear Market?

【TL;DR】

Bitcoin‘s price recently fell below $80,000 again, sparking market panic. The Fear & Greed Index dropped sharply, and Glassnode’s NUPL is nearing levels typical of early bear markets. Technically, the critical support level at $78,000 is under pressure, with potential for further declines to the $70,000-$72,000 range. Macroeconomic tailwinds have faded, with U.S. stocks falling, inflation expectations rising, and the Fed likely delaying rate cuts, weakening Bitcoin‘s appeal as a safe-haven asset. Meanwhile, institutional funds continue to flow out, and ETF enthusiasm is cooling, adding to market pressure. Although short-term selling pressure has eased, the overall market trend remains unclear. Investors should remain cautious and wait for clearer signals before making decisions.

The introduction

Recently, the cryptocurrency market has experienced significant volatility. Bitcoin‘s price has fallen below the $80,000 mark for the second time in three weeks, sparking widespread attention and panic in the market. Is the bull market over for good? Combining recent market data, technical analysis, and macroeconomic context, this article will explore the current state of the market and potential future developments from multiple perspectives.

Market Fear Index Turns Red

Market sentiment is one of the key indicators for assessing trend direction.

Recently, the Fear & Greed Index dropped to 35, placing it in the “fear” zone, a sharp decline from last month’s 70 (“extreme greed”). This index, which integrates factors such as volatility, trading volume, and social media sentiment, clearly reflects the rapid deterioration of investor confidence.

At the same time, Glassnode’s Net Unrealized Profit/Loss (NUPL) indicator has fallen from 0.6 (“high greed”) to 0.2, approaching levels typical of the early stages of a bear market. Historically, when the NUPL value falls below 0, the market may enter a “capitulation phase.” While the current value has not completely collapsed, panic sentiment is nearing a critical point.

Key Levels Facing a Battle for Support

From a technical analysis perspective, Bitcoin is currently at a critical juncture.

Recently, Bitcoin‘s price has dropped from a high of $82,000 to $76,000, forming a classic double-top pattern. This pattern is typically viewed as a bearish signal, raising widespread concern about future trends.

Some analysts predict that if $78,000 can act as a bottom support level, Bitcoin may need two to three months to confirm its trend. During this period, the market’s focus will be on the battle between the 50-day moving average (around $77,500) and the 200-day moving average (around $72,000). If the price can hold above the $78,000 support level and gradually stabilize and rebound, the market may form a W-bottom pattern, laying the foundation for subsequent upward movements.

However, pessimistic forecasts persist. From a pattern perspective, if bearish forces continue to dominate, Bitcoin’s price could break below current support levels and further drop to the $70,000-$72,000 range, a high-volume trading area from earlier periods. This range not only represents critical support at the 200-day moving average but also serves as a key retracement level following the rebound from the August 2024 lows. In this case, the market may undergo a deeper correction, potentially signaling further declines.

Additionally, indicators such as the Relative Strength Index (RSI) have fallen from the overbought zone (above 70) to a neutral-to-lower level (42), suggesting that short-term selling pressure has eased. However, the RSI has not yet entered the oversold zone (below 30), indicating that the market may not have reached a true bottom. Overall, from a technical perspective, the market remains highly uncertain. Investors should exercise caution at this time, avoiding blindly chasing highs or catching falling knives. Waiting for clearer trend signals before making decisions could be a more prudent approach.

Macroeconomic Tailwinds Exhausted

With the increasing involvement of Wall Street, macroeconomic factors have an increasingly significant impact on the cryptocurrency market.

Recently, concerns about a U.S. economic recession have intensified. The U.S. stock market experienced a “Black Monday,” with the Dow Jones Industrial Average dropping 2% and the Nasdaq plunging 4%. Meanwhile, statements from the U.S. Treasury Secretary and former President Trump have further heightened market unease. The latest consumer expectations survey from the New York Federal Reserve shows that short-term inflation expectations in the U.S. rose in February, while medium- to long-term expectations remained stable, reflecting increased consumer financial concerns.

Goldman Sachs recently downgraded its U.S. economic growth forecast, pointing out that the latest round of tariff hikes could have broader impacts. Rising inflation may lead to a decline in real consumer income, making people more cautious about spending, potentially stalling economic growth. At the same time, tariff uncertainties are causing financial market turbulence, reducing corporate investment willingness, and lowering business confidence in the economic outlook.

The yield on the U.S. 10-year Treasury note has risen to 4.2%, attracting funds to flow back to traditional safe-haven assets from the cryptocurrency market. Additionally, persistently high inflation expectations may prompt the Federal Reserve to delay interest rate cuts, weakening Bitcoin’s appeal as a digital gold safe-haven asset.

Institutional Enthusiasm Cools as ETF Outflows Continue

Weakened institutional demand has become a major driver of the recent market downturn.

According to CoinShares data, crypto investment products have seen net outflows for four consecutive weeks, totaling $4.75 billion. U.S. investors have been particularly prominent in withdrawing funds, with $922 million flowing out last week alone.

Meanwhile, outflows from Bitcoin spot ETFs also reflect waning institutional enthusiasm. Since March, U.S. Bitcoin spot ETFs have seen net outflows exceeding $500 million, with Grayscale’s GBTC experiencing particularly significant outflows. Institutional investors are reassessing the risk-reward ratio of crypto assets, further undermining market confidence.

In summary, while negative factors are indeed increasing, there is still insufficient evidence to determine whether the bull market has ended completely.

From a technical standpoint, there remains a risk of further declines. From a broader perspective, the current market correction also reflects changes in the global macroeconomic environment and investor risk appetite. Although short-term technical indicators like the RSI show easing selling pressure, the market has not yet entered the oversold zone, indicating that sentiment and trends remain unclear.

Against this backdrop, Bitcoin’s price volatility is not only a technical phenomenon but also a reflection of market reactions to future global economic uncertainties. Investors should exercise caution while monitoring key technical levels and macroeconomic events, waiting for clearer signals before making their moves.

Author: Orisi.T, Researcher at Gate.io
This article represents only the author’s point of view and does not constitute any trading advice. Investment carries risks, so decisions should be made with caution. The content of this article is original and copyrighted by Gate.io. If you need to reprint, please indicate the author and source, otherwise legal responsibilities will be pursued.