TL;DR
- Market Shock: Bitcoin fell below $80,000 after confirmation that Kevin Warsh will lead the Federal Reserve, triggering more than $2.5 billion in long liquidations and pressuring equities, gold, and silver.
- Volatility Spike: Options markets remain defensive as Bitcoin stabilizes near $77,500, with analysts warning that a break below $74,000 could deepen the retracement while resistance continues to cap upside momentum.
- Cycle Floor Debate: PlanC said bitcoin’s drop near $77,000 resembles past capitulation lows, while broader markets faced a $2.56 billion liquidation day and gold plunged to $4,600 amid a sharp risk-off shift.
Risk-off sentiment swept across global markets as traders reacted to confirmation that Kevin Warsh will become the next chair of the Federal Reserve, triggering a sharp deleveraging wave in crypto. Bitcoin slipped below the key $80,000 level over the weekend, briefly touching $74,500 as fragile sentiment collided with persistent ETF outflows and tightening expectations. The move accelerated a broader unwind that spilled into equities and precious metals, with gold and silver extending steep pullbacks from recent highs.
Bitcoin Breaks Support as Liquidations Surge
QCP Asia said Bitcoin’s drop below technical support sparked more than $2.5 billion in liquidations of leveraged long positions, intensifying downside pressure across major assets. Ether fell below $2,170 while broader risk aversion pushed equities lower and dragged traditional havens deeper into retreat. Markets began pricing a higher probability of earlier policy normalization, weighing on non-yielding assets and amplifying volatility. Higher margin requirements in futures markets further accelerated the unwinding of leveraged positions.
Options Markets Flash Caution as Sentiment Weakens
Despite stabilizing above $74,500, BTC remains vulnerable. QCP noted that options positioning is still skewed toward put protection, although demand for hedges has moderated compared with the aggressive activity seen during the November slide from $107,000 to roughly $80,500. Analysts warned that momentum indicators continue to point lower, leaving upside capped near recent resistance. A sustained break below $74,000 could open the door to a deeper retracement toward levels last seen in 2024.
Analysts Debate Whether a Cycle Floor Is Forming
Analyst PlanC argued that bitcoin’s weekend drop to around $77,000 may represent a capitulation-style low rather than the start of a prolonged downturn. He compared the move to past drawdowns that preceded major recoveries, including the 2018 bear market low, the March 2020 COVID crash, and the declines following the FTX and Terra-Luna collapses. He estimated the current cycle bottom likely sits between $75,000 and $80,000, suggesting a potential final shakeout within an ongoing bull cycle.
Manic Monday Adds Pressure Across Crypto and Metals
February opened with severe turbulence as crypto liquidation peaked at $2.56 billion on January 31, ranking among the largest wipeout days in history. Bitcoin slid to around $77,500 while Ethereum tumbled over 22% in a week to roughly $2,200. Gold dropped 4.5% today alone and more than 17% from recent highs, falling to $4,600 per ounce and erasing nearly $2 trillion in implied market cap. Total crypto market cap has shrunk by $800 billion since October, though charts show similarities to 2022 bottoming patterns.
