Bitcoin Takes a Nosedive: Is It Time to Panic or Just a Really Bad Joke?

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Markets

What to know:

  • Bitcoin, that rollercoaster we all love to hate, just lost 7.3% of its value-like those socks you put in the dryer that mysteriously disappear. Now it’s sitting at $82,700, while the CoinDesk 20 index thinks it’s on a diet, dropping 10.3% over the past week.
  • Santiment, which sounds like a therapy group for crypto addicts, reports that market fear is so extreme it could be mistaken for a horror movie. Historically, though, this kind of panic has been a signal that prices might actually recover, which feels like being told to “just breathe” during a dental procedure.
  • Long-term bitcoin holders, perhaps feeling the pressure of their own bad decisions, are selling faster than you can say “HODL.” Some experts even suggest we might be inching toward a bear-market bottom, which sounds cozy until you realize it’s not a real bottom but rather a pit of despair.

Meanwhile, U.S. President Donald Trump has thrown a surprise curveball by nominating former Fed governor Kevin Warsh as the next Federal Reserve chair. This news has boosted the dollar and sent precious metals packing, dragging bitcoin down below a key support level. It’s like watching your favorite team lose in the finals because the ref fell asleep.

According to Glassnode’s data (which, let’s be honest, sounds like a place where they build glass houses), bitcoin was trying to hold steady just above $83.4K-the last bastion of hope in the land of financial despair. But alas, if it breaks below that zone, we might find ourselves sliding towards $80.7K, also known as the True Market Mean. Sounds like a great place to set up camp, right?

Guess what? That breakdown is happening. Over the past week, bitcoin has dropped more than 9.2% and is currently trading at $81,200. At this rate, you might want to consider a side hustle-or just start collecting Beanie Babies instead.

The broader market, as measured by the CoinDesk 20 (CD20) index, has lost 12.4% of its value. The Crypto Fear & Greed Index? Let’s just say it’s taking a vacation in “extreme fear” territory. Congratulations, everyone, we’ve officially reached the level of anxiety usually reserved for tax season.

Glassnode notes that the short-term holder supply at a loss remains at 19.5%, well below the 55% capitulation threshold. So, there’s some resilience among the traders, even if they’re clutching their pearls in panic. It’s a little like being on a sinking ship but deciding to wear your life jacket anyway.

On the derivatives side, funding rates are as muted as a mime at a silent retreat, which suggests that speculative appetite is anything but adventurous. Options markets are pricing in a greater demand for downside protection, and dealer gamma is flipping negative below $90K. This all spells out one thing: volatility spikes are coming, just like your uncle’s annual holiday visit.

Put it all together and you’ve got a fragile market that’s not quite shattered yet. Liquidity is the name of the game, folks, so keep your eyes peeled.

The crypto world may feel like it’s gripped by fear right now, but don’t fret; that might actually be a good sign. Or at least that’s what they tell you when you’re holding onto a sinking ship.

According to our friends at Santiment, sentiment across various cryptocurrency communities has plummeted to extreme lows-levels that, historically, have been precursors to price recoveries. It’s like finding out that the worse things get, the better they might become. Talk about a silver lining!

In their report, Santiment highlighted the surge in bearish commentary on social media, which is as rare as a cat that likes water. “While network fundamentals are stagnant,” they wrote, “crowd sentiment has hit extreme negativity levels.” This excessive bearishness could mean a local bottom is near, or it could just mean everyone needs a hug.

As prices continue to drop like a bad sitcom, long-term bitcoin holders are unloading their assets at a pace not seen since August. And why? Because the dollar is suddenly feeling great about itself again.

Some industry observers, always the optimists, say this mood might be fleeting. Bitwise’s CIO Matt Hougan recently chimed in on CoinDesk’s Markets Outlook, suggesting that crypto is in the late stages of a bear-market bottom. Apparently, crypto markets often move in the opposite direction of the crowd-so if everyone’s panicking, maybe it’s time to buy yourself a new pair of socks.

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2026-01-31 20:38