Bitcoin sees 30% retracement as selling pressure increases — Bitfinex
Bitcoin’s latest bout of volatility marks a significant turning point in the cryptocurrency landscape, as recent analyses from crypto exchange Bitfinex indicate the asset has faced its second-largest correction during the ongoing bull run. The digital currency saw a notable decline from its historic peak of $109,590, set on January 20, down to $77,041 in the week spanning March 9-15. This amounts to a staggering 30% descent, a shift primarily instigated by selling pressure from short-term holders.
Short-term holders, as defined by Bitfinex, are investors who have recently entered the market, having purchased their Bitcoin within the last seven to 30 days. These individuals are currently grappling with unrealized losses, making them particularly susceptible to capitulation during bearish phases.
Moreover, the concerning outflow from Bitcoin exchange-traded funds (ETFs)—approximately $920 million during the same period—signals a lack of robust institutional backing, further exacerbating the downward momentum. Bitfinex’s report outlines that without a resurgence in institutional buying power, the prevailing selling pressure may persist.
At present, Bitcoin’s trading price is stabilizing around $84,357, reflecting a 9.5% recovery from its recent low. Analysts from Bitfinex are keeping a close eye on the evolution of institutional demand at these lower price levels, which could lead to supply absorption and contribute to market stabilization.
Bitfinex notes, "While institutional flows and the macro situation are pivotal for market direction in the mid-term, a statistical history of 30% drawdowns often indicates a potential low point before an upward price continuation occurs." If Bitcoin manages to maintain its position around current levels, historical patterns suggest a robust rebound could be on the horizon.
Bitcoin ETPs Experience Record Outflows
The ongoing trend isn’t confined to Bitcoin alone; across the broader cryptocurrency landscape, exchange-traded products (ETPs) have witnessed a troubling five-week streak of outflows, totaling $6.4 billion as of March 14. Among these, Bitcoin ETPs have suffered the most, recording a notable $5.4 billion in losses, underscoring an apparent waning interest from institutional investors.
The broader macroeconomic environment is purportedly weighing heavily on market sentiment. Data indicates that U.S. consumer confidence has plummeted to its lowest since two years ago, accompanied by rising inflation expectations and economic uncertainties. Further compounding concerns, a recent model from the Federal Reserve predicted a potential 2.8% contraction of the U.S. economy in the first quarter of 2025.
The specter of trade wars is also looming over Bitcoin’s status as a safe-haven asset in investors’ minds, adding to the overall market anxiety. As adjustments to tariffs and trade policies play out, Bitcoin miners are left in a precarious position, uncertain about the future viability of their operations under a fluctuating regulatory framework.
Simultaneously, despite the White House’s recent announcement regarding a U.S. Bitcoin strategic reserve and digital asset stockpile, investors remain skeptical about the broader implications for Bitcoin’s bull market trajectory. Reportedly, this announcement has done little to assuage fears surrounding an impending recession.
As Bitcoin navigates these turbulent waters, analysts and investors alike are left to ponder the intertwining influences of institutional sentiment, macroeconomic conditions, and market psychology on the cryptocurrency’s ability to rebound from its latest correction. The next few weeks will likely be critical in determining the future course of Bitcoin and its standing in the wider financial ecosystem.
