Bitcoin Struggles Around $92,000 as Market Sentiment Plunges to "Extreme Fear" – FX Leaders

Bitcoin (BTC) is currently trading just above $92,000, down nearly 4% in the past 24 hours as the leading cryptocurrency continues to face significant headwinds. This decline marks a three-month low for Bitcoin BTC/USD, which had been trading in a tight range between $91,000 and $102,000 since late November.

Bitcoin Price Analysis

After over 90 days of consolidation, analysts at bitcoin exchange Bitfinex characterise Bitcoin as being at a “critical junctural”. According their February 24 Bitfinex Alpha report, “the momentum needed for a sustained breakout has been lacking, and this has led to a period of contraction and consolidation almost all major crypto assets.”

With overall market capitalization declining about 8% in the past day, from over $3.31 trillion to almost $3.09 trillion, the wider bitcoin market has also suffered. Long Bitcoin positions account for $277 million of the $961 million avalanche of liquidations set off by this market collapse over the past 24 hours.

BTC/USD Technical Indicators

BTC/USD

Declared “Extreme Fear,” the Crypto Fear & Greed Index—which gauges market mood on a 0 to 100 scale—has dropped to 25 points. From the “Neutral” reading of 49 yesterday, this marks a startling 24-point decline. September saw the last time the indicator fell into “Extreme Fear” area as Bitcoin was trading about $54,000.

On-chain data shows some encouraging trends even with the price drop. Over the previous three months, Bitcoin’s realized market capitalization has climbed $160 billion (about 23%), suggesting significant fresh capital inflows. But network activity has drastically dropped; daily transfer volume dropped 76% and active wallets dropped 74% over the past week.

Economic Uncertainty Weighs on Risk Assets, Including BTC

Bitcoin’s current struggles appear to be closely correlated with traditional financial markets. The S&P 500 has fallen by 2.3% in the last five trading days, while the Nasdaq Composite has dropped 4% over the same period.

The market-wide drop appears to be driven by increased economic uncertainty. Reflecting rising worries about inflation and economic uncertainty, U.S. consumer confidence in February dropped 10% from January to a 15-month low according to the University of Michigan Consumer Survey.

Adding to market volatility, President Donald Trump recently announced that intended 25% tariffs against Canada and Mexico are “going forward on time, on schedule,” hence aggravating inflationary pressures and undoing of last two years’ achievement in disinflation.

Institutional Interest Slowing?

With outflows noted on every trading day for the week ending February 21, total $552.5 million, institutional demand for Bitcoin through spot exchange-traded funds has “slowed significantly.” Just on February 20, $364 million was clearly outflow, suggesting declining institutional interest.

Bitcoin’s Near-Term Outlook

Currently down 8%, Bitcoin is on route to show its first negative monthly returns since February 2020. Based on present market mood, there seems little chance of Bitcoin reaching a new all-time high in the foreseeable future.

Founder of crypto hedge fund Lekker Capital Quinn Thompson projects an 80% possibility that Bitcoin won’t hit new highs during the next three months and a 51% probability it won’t reach new highs even in the next 12 months.

Analysts speculate that this crucial milestone is weakening as Bitcoin attempts the $95,000 support level for the third time in a week. Should a breach occur, Bitcoin would perhaps return to values below $90,000.

For long-term investors, there are some encouraging signals though. Long-term holders are not panic-selling, according to data; “coin days destroyed” measures fall to a new multi-year low, proving persistent conviction despite transient price volatility.

Arslan Butt

Index & Commodity Analyst

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.