Ah, the fickle nature of Bitcoin (BTC), which has recently plummeted to a staggering $83,500 on this fateful day of February 26, 2025. This marks its lowest price since the autumn of 2024, a time when one could still dream of riches without the weight of existential dread. A mere $12,820 drop over three days has obliterated over $1 billion in leveraged long positions, as if the market were a cruel jester, laughing at the folly of those who dared to dream. Analysts, with their furrowed brows, attribute this bearish sentiment to the looming specter of a global economic recession. Yet, one must also consider the relentless pressure from derivatives markets and the dismal corporate earnings that keep Bitcoin languishing below the coveted $90,000 mark.
In a twist of fate, the sell-off coincides with news of the illustrious US President Donald Trump advocating for tariffs on imports from our friendly neighbors, Canada and Mexico. Investors, in their quest for safety, have scurried towards long-term US Treasurys, as if they were the last lifeboats on a sinking ship. Even gold, that age-old bastion of value during turbulent times, has succumbed to a 2.2% decline in just two days, falling from an all-time high of $2,956 on February 24. The market, it seems, is a tempestuous sea, and we are but humble sailors. ⚓️
Unlike the well-heeled giants of Big Tech, Bitcoin offers no dividends, no comforting embrace during economic downturns, nor the opportunity to acquire smaller competitors at bargain prices. The S&P 500, in its stoic manner, serves more as a hedge than a high-risk investment. Analysts like the ever-optimistic John Butters from FactSet project a robust 16.9% year-over-year earnings growth for the fourth quarter. But alas, what is a number when the heart is heavy?
Meanwhile, critics have taken to the stage, arguing that Strategy (formerly MicroStrategy) has single-handedly propelled Bitcoin’s price to the dizzying heights of $100,000. Yet, the question lingers: can this company continue to raise funds? With its shares plummeting 19.4% in a mere seven days, investor skepticism looms large over its ambitious plan to secure a $42 billion capital increase over three years. Doubts about Bitcoin’s ability to maintain its value without such backing are as palpable as the tension in a Dostoevsky novel.
BTC needs positive economic signals, AI bubble fears aren’t helping
For Bitcoin to ascend once more to the lofty heights of $95,000, traders are desperately seeking positive economic signals. The artificial intelligence behemoth Nvidia is set to unveil its quarterly earnings after the market closes today. Many traders, with bated breath, fear that the company may falter amidst global tariff conflicts and US export restrictions on processing chips to China. The specter of an AI bubble looms, dampening investors’ appetite for risk, as evidenced by US 5-year Treasury yields plummeting to their lowest level since December 2024.
The high demand for fixed-income assets, coupled with a sharp rise in gold prices, often signals market fear. This is particularly troubling for Bitcoin, especially after outflows from the spot Bitcoin ETFs exceeded $1.1 billion on February 24 alone, according to Farside Investors data. The wave of panic selling has eroded trust, as investors had hoped that the mighty institutions would manage Bitcoin’s volatility and serve as a buffer against the impending economic storm.
The impending $6.9 billion Bitcoin monthly options expiry on February 28 has traders bracing for a lower price. The bulls, caught off guard, find themselves in a precarious position, even though put (sell) options open interest is $530 million below call (buy) options. Out of the $3.7 billion in call options, less than $60 million are set at $88,000 or below.
This gives the bears ample reason to keep Bitcoin’s price tethered below $88,000 before the expiry at 8:00 am UTC. With call options likely
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2025-02-26 22:52