The broader cryptocurrency market suffered US$1.56 billion in liquidations earlier this week, with the price of bitcoin falling well below its all-time high of US$108,786.
Bitcoin was hovering above US$84,000 on Thursday, down 22.4 per cent from its peak, with BTC Markets head of finance Charlie Sherry declaring the currency has officially entered a “technical bear market”.
“Confidence has been shaken and the market’s volatility serves as a reminder that it can take everything in an instant,” Sherry said.
Delving into its sudden dive, Coinstash co-founder Mena Theodorou explained that recent events have seen bitcoin lose its “key US$89,000 support level”.
“Fears of a global economic slowdown are driving risk-off sentiment. Weaker corporate earnings and pressure from derivatives markets have also weighed on BTC, contributing to its drop below the US$89,000 mark,” Theodorou told InvestorDaily.
Adding to the pressure, around U$5 billion in bitcoin options contracts are set to expire on Friday, driving expectations of lower prices.
“Bears have a clear incentive to keep BTC below $88,000 before expiry and with bulls lacking momentum, a rebound above $90,000 seems unlikely in the near term.”
Theodorou added that the sell-off coincides with rising geopolitical tension, including US President Donald Trump’s apparent willingness to engage in tariff wars with several countries.
As such, investors have shifted to long-term US Treasuries, while even gold – typically perceived as a safe haven – has fallen 2.2 per cent in 48 hours.
Mark Hiriart, head of sales at Zerocap, similarly pointed out that bitcoin’s overnight drop aligns with a broader risk-off move that has sent equities, gold, and cryptocurrency lower.
Amid growing stagflation concerns, market sentiment has soured, Hiriart explained, with soft data suggesting that tariffs are already extinguishing consumer confidence.
“Adding to the uncertainty, the US administration’s confirmation of a 25 per cent tariff on Canadian and Mexican imports – coupled with expectations of tougher actions against China – has pushed investors to reduce risk exposure,” Hiriart said.
“As a result, we see limited marginal buyers for risk assets, increasing the likelihood of further downside as crowded trades unwind.”
According to Hiriart, ETF outflows also signalled weakening conviction in bitcoin, with cryptocurrency behaving as a “high-beta risk asset” in volatile markets.
“Traders seeking liquidity often exit crypto first, amplifying downside moves.”
Looking forward, the sales lead said bitcoin’s next key support level sits at around US$70,000.
However, for the cryptocurrency to reach this level, a prolonged downturn in equities and sustained risk-off sentiment would need to take place, Hiriart warned.
“While US stock indices have been under pressure for several days, it’s still too early to determine whether this is the start of a broader trend reversal or just a temporary market correction,” he said.
“While long-term fundamentals for BTC remain intact, near-term price action remains vulnerable as macro uncertainty weighs on broader markets.”
Despite current challenges, he believes that rate cut expectations for later this year should support cryptocurrency, while regulatory clarity and a comprehensive US cryptocurrency policy framework are also expected to push the asset higher.
And while Theodorou agrees that a broad cryptocurrency rally might not be on the cards right now, a short-term reversion could be.
“This cycle has been defined by selective capital flows, a trend that is likely to continue amid ongoing macro uncertainty,” Theodorou said.
As for Sherry, he believes the bull market is not necessarily over.
“Looking ahead, macro factors will be key. With crypto-native catalysts largely exhausted, the market is now watching for signs of easing trade tensions or a shift toward looser monetary policy. Despite the recent turmoil, the bull case for crypto remains intact, institutions are still buying, and regulatory clarity continues to improve.”
