Bitcoin Price Risks Correction to $72K as Investor Sentiment Weakens
The price of Bitcoin has been on a rollercoaster ride in recent weeks, falling over 28% from its record high of over $109,000 reached on January 20. The current drop to an over three-month low of $78,197 on February 28 has left investors wondering if the market is due for another correction. According to dispatch analyst Iliya Kalchev at digital asset investment platform Nexo, Bitcoin may experience a deeper retracement toward the "low $70,000's range as the market repositions."
However, Kalchev also noted that a significant drop below $75,000 seems less likely. This support could provide a foundation for a more sustainable recovery, reducing the likelihood of a deeper retracement. Other analysts have predicted a Bitcoin bottom near $70,000 in early 2025 before the next stage of the rally.
Based on its correlation with the global liquidity index, Bitcoin's right-hand side (RHS), which marks the lowest bid price someone is willing to sell the currency for, may fall below $70,000 around the end of February after it peaked near $110,000 in January. The first warning of a correction to $70,000 came from Raoul Pal, founder and CEO of Global Macro Investor, in November, when he also predicted that Bitcoin would reach a "local top" above $110,000 in January, before the current correction.
Despite the predictions of some analysts, the crypto market remains limited by a lack of investor confidence. The Crypto Fear & Greed Index — which measures overall crypto market sentiment — has fallen to a near three-year low of 20, last seen in July 2022. This decline was caused by an array of external and crypto-specific factors, including a recent string of long liquidations across numerous flushes.
The wider crypto market is still recovering from the $1.4 billion Bybit hack, which occurred on February 21, marking the largest hack in crypto history. However, in a positive signal for the crypto industry, Bybit has continued to honor customer withdrawals and had fully replaced the stolen $1.4 billion in Ether by February 24, just three days after the attack.
The lack of investor confidence is also reflected in the decline of Bitcoin's investor sentiment. According to Alternative.me data, the Crypto Fear & Greed Index has dropped to its lowest level since July 2022. The last time investor sentiment dropped to similar levels was a month after Bitcoin fell to $17,500 in 2022, experiencing a monthly decline of over 37% in June 2022.
The decline in investor sentiment is attributed to an array of external and crypto-specific factors, including the recent hack. However, despite these challenges, some analysts remain optimistic about the future of Bitcoin. With its correlation with the global liquidity index, Bitcoin's RHS may fall below $70,000 around the end of February, marking a significant drop for the cryptocurrency.
Overall, while the predictions of some analysts are promising, the crypto market remains uncertain due to the lack of investor confidence. As the market continues to reposition, investors will be watching closely to see if Bitcoin can break out of its current consolidation and continue its upward trend.
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About the Author:
The author is a journalist with expertise in cryptocurrency and blockchain technology. They have been covering the latest developments in the crypto market for several years and are well-versed in the latest trends and analysis.