Bitcoin Plummets to $87000: Trump Shakes the Market Again, but Reasons for Optimism Remain

In the past 24 hours, the price of Bitcoin (BTC) has dropped by more than 3.5%, falling below the $91,000 mark to its lowest level since late November. Simultaneously, the total market capitalization of cryptocurrencies has also declined by 8%, dropping from $3.31 trillion to $3.09 trillion.

This price drop follows Donald Trump’s recent remarks about imposing a 25% tariff on imports from Canada and Mexico. In the wake of this news, the Crypto Fear and Greed Index plummeted from 49 to 25, indicating “extreme fear” in the market.

Bitcoin Plummets to $87000

This situation has led to widespread liquidation of trading positions. According to data from CoinGlass, a total of $961.65 million in positions were liquidated in the past 24 hours, with $891.52 million attributed to long positions and $70.14 million to short positions. The majority of the liquidation volume was from Bitcoin long positions, totaling over $277 million.

Analysts at the exchange Bitfinex consider these price levels to be a critical point for the market. Over the past three months, Bitcoin has been fluctuating between $91,000 and $102,000, and due to the lack of a necessary catalyst for an upward movement, it continues to trade within a limited range.

Bitfinex analysts have emphasized that Bitcoin is increasingly correlating with traditional financial markets. They attribute the current crypto market downturn to macroeconomic uncertainties and the stagnation of growth in traditional markets.

Meanwhile, institutional demand for Bitcoin through ETF funds has decreased. In the week ending February 21, 2025, investors withdrew $552.5 million from these funds.

Reports also indicate a 10% drop in American consumer confidence in February, reaching its lowest level in the past 15 months. This has heightened concerns about inflation and uncertain economic conditions.

In recent trading hours, the price of Bitcoin (BTC) has fallen below $89,000, reaching levels that have resisted decline since December. The recent drop in Bitcoin’s price coincided with a significant increase in the open interest of futures contracts and the emergence of signs of seller dominance.

According to data from Coinglass, the open interest of BTC/USDT futures contracts on Binance has increased to about 12,000 Bitcoins (over $1 billion), while the price has fallen from $96,000 to below $89,000. The increase in open interest alongside the price drop indicates that traders are entering new short positions, anticipating further price declines.

The Cumulative Volume Delta (CVD) index in the futures and spot markets of this exchange is also negative and has become more negative with the price drop. This indicates that selling pressure has overtaken demand.

Thus, sellers have been in control of the market over the past day. The candlestick pattern formed during this period is a Bearish Marubozu, indicating seller dominance and the likelihood of a continued downward trend.

In the current market conditions, Bitcoin’s key support levels are at $89,200 (the low of January 13) and the 200-day moving average at $81,661. In contrast, the main resistance is around $99,520 (the high of February 21).

Three Signs Keeping the Bulls Hopeful!

After Bitcoin’s (BTC) unsuccessful attempt to reach the $100,000 level on February 21, its price took a downward turn and today fell to the $87,000 channel. This decline was exacerbated by a hacker attack on the Bybit exchange, but the excessive use of trading leverage and the liquidation of on-chain positions also played a role in this price drop. However, three important charts show that Bitcoin’s upward trend is not yet over.

Fear and Greed Index Chart

After Bitcoin’s fall to $87,000, this index has reached a state of “extreme fear.” Despite the high volume of liquidated positions, there is a possibility of further decline in the short term. However, positive developments such as the approval of altcoin ETF funds and changes in market regulations could be a catalyst for a return to an upward trend.

Bitcoin Power Law Cloud Chart

This model, by examining past price cycles, standard deviations, and predictive patterns, determines a range for Bitcoin’s future trend. According to this model, the recent fall is still within an acceptable range. The analyst of this model states:

If Bitcoin remains in the $95,000 range for 4 to 5 months, I still expect it to surpass $200,000 by November.

Macroeconomic Chart Related to the ISM Index

This chart shows Bitcoin’s price movement alongside the Institute for Supply Management (ISM) index. This index, which assesses the health of the U.S. economy, has an inverse relationship with Bitcoin’s price. Analyst Shock believes that the panicked selling of Bitcoin in the current conditions could lead to missing out on the potential growth opportunities for this cryptocurrency in the future.

Why Did Bitcoin’s Price Fall to $87,000?

Although the $1.5 billion theft from the Bybit exchange initiated this decline, the excessive use of trading leverage and investors’ greed caused Bitcoin’s price to fall to $87,000. Data from CryptoQuant shows that the ratio of trading leverage increased from 0.235 to 0.271, indicating a 17% growth between February 3 and 20. Although this ratio later fell to 0.247, it has since risen back to 0.270, which strengthens the possibility of further price declines.