BTC Records Its Worst 3-Day Slump Since FTX Implosion – Can It Recover?

Bitcoin Faces Sharp Decline as Market Uncertainty Grows

In a worst-case scenario, Bitcoin’s price could drop to the $72,000–$74,000 range, one analyst predicts.

Bitcoin’s Bearish Turn

Bitcoin’s (BTC) prolonged consolidation above $90,000 ended on a bearish note this week, with a dramatic downturn shaking the market. The cryptocurrency has experienced a 12.6% decline in the first three days of the week (UTC hours), marking the steepest drop since the FTX collapse in November 2022, according to TradingView data.

The sell-off aligns with CoinDesk’s analysis earlier this month, which pointed to investor frustration over the lack of immediate action from President Donald Trump’s administration regarding the proposed national BTC reserve and tighter fiat liquidity conditions.

Institutional demand for both Bitcoin and its second-largest peer, Ethereum (ETH), has also waned, pushing CME futures closer to backwardation—a market condition where spot prices exceed future prices. Additionally, pressure on the Nasdaq, Wall Street’s tech-heavy index, has further contributed to BTC’s struggles.

What’s Next for Bitcoin?

The market’s immediate outlook appears bearish, with the possibility of further declines. The upcoming March 4 deadline for tariffs on Canada and Mexico could reignite economic concerns, creating a risk-off environment that negatively impacts BTC.

Don’t Count on Friday’s Core PCE

Investors hoping for support from Friday’s U.S. “core” Personal Consumption Expenditures (PCE) index—the Federal Reserve’s preferred inflation gauge—may be disappointed, warns Noelle Acheson, author of the Crypto is Macro Now newsletter.

Core PCE, which excludes food and energy costs, is projected to have increased 2.6% year-over-year in January, down from December’s 2.8%, per FactSet estimates cited by Morningstar. While lower inflation typically raises expectations for Fed rate cuts and a risk-on sentiment, this time may be different.

Markets might overlook the softer inflation print and instead focus on rising forward-looking inflation indicators. The Conference Board’s consumer confidence survey for February showed a significant rise in one-year inflation expectations, from 5.2% to 6%. Additionally, two- and five-year inflation swaps have also been climbing, as noted by CoinDesk.

Acheson suggests that even if the PCE comes in below forecasts, it could be perceived as a sign of slowing economic growth, triggering further market anxiety.

“This downturn is largely macro-driven,” Acheson commented, citing concerns over tariffs, overvalued corporate stocks, and excessive AI-related investments.

Despite the current market turmoil, Acheson believes Bitcoin could regain stability due to its dual nature as both a risk asset and a digital safe haven.

“For most portfolios, this duality implies that there is a price level where new long-term investors will step in—this, in turn, encourages traders to return,” Acheson noted.

Key Support Levels and Demand Zones

According to technical analysis, a breakdown from a prolonged range, like the one seen in Bitcoin, often results in a decline equal to the breadth of the previous range. Given BTC’s recent drop from the $90,000-$110,000 zone, a potential move to $70,000 is on the table.

“In a worst-case scenario, Bitcoin could fall to the $72,000–$74,000 range before seeing a rebound,” said Markus Thielen, founder of 10x Research, in a Wednesday client note. He pointed to Bitcoin’s lagging correlation with the global central bank liquidity index as a key factor.

However, BTC has managed to recover to $86,000 at the time of writing, after testing a possible demand zone around $82,000. Thielen identified this level using an on-chain metric known as the short-term holders’ realized price—the average purchase price for addresses holding BTC for less than 155 days.

“Historically, Bitcoin rarely trades below this short-term holders’ realized price level for extended periods in bull markets,” Thielen explained. “However, during bear markets, it often stays below for longer durations.”

During the summer 2024 consolidation, Bitcoin dropped $9,616 below this metric, which currently sits at $92,800. If a similar pattern plays out, BTC could revisit the $82,000 level before stabilizing.

Regulatory Clarity Could Provide a Boost

Some analysts remain optimistic that regulatory clarity following Wednesday’s Senate Committee hearing on Exploring a Bipartisan Legislative Framework for Digital Assets could provide a much-needed boost to the market.

“A well-defined regulatory framework may be exactly what’s needed to encourage institutional participation and unlock the next wave of capital inflows,” said Matt Mena, crypto research strategist at 21Shares, in an email statement. “If the U.S. delivers clear guidance on stablecoins and broader digital asset regulations, we could see significant institutional allocations into the sector.”

Final Thoughts

While Bitcoin’s short-term outlook remains uncertain, its long-term appeal as both a speculative investment and a store of value could ultimately attract fresh capital. If macroeconomic concerns subside and regulatory clarity emerges, BTC may find stronger footing in the months ahead.

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