Bitcoin has taken a steep fall, crashing to $82,300 and shedding nearly 15% in just a week. The broader cryptocurrency market hasn’t fared any better, with over $500 billion wiped out, bringing the total market cap down to $2.8 trillion. This sharp decline has triggered massive liquidations, totaling $770 billion in the last 24 hours. Meanwhile, the Crypto Fear & Greed Index has plummeted to 20, signaling extreme fear among investors. But what’s driving Bitcoin’s recent price drop?
Bitcoin Struggles Amid NVIDIA’s AI Boom
A key factor behind Bitcoin’s losses is the booming AI sector, particularly the surge in NVIDIA stock. The semiconductor giant reported a record-breaking $39.3 billion in Q4 revenue, marking a 78% year-over-year increase. As a result, NVIDIA’s stock price soared by 4%, adding $125 billion to its market cap in a single day.
This rapid growth in AI investments has led to a shift in investor focus, with capital flowing from digital assets into high-growth AI stocks. As more funds move towards AI-related equities, Bitcoin’s momentum has weakened significantly.
Bitcoin ETFs See Unrelenting Outflows
Another significant contributor to Bitcoin’s decline is the continued exodus from Bitcoin exchange-traded funds (ETFs). Data from Farside shows that between February 24 and February 26, Bitcoin ETFs witnessed outflows of $2.43 billion. This marks seven straight sessions of net withdrawals, intensifying selling pressure.
Leading the outflows are major financial institutions, including Fidelity, whose large-scale Bitcoin sales have further dampened investor sentiment.
$5 Billion in Bitcoin Options Expiring
Bitcoin is also facing added pressure from the impending expiration of $5 billion worth of options contracts on February 28. With nearly 78% of these contracts set at higher strike prices, they are likely to expire worthless.
Additionally, on-chain data reveals that $1.3 billion in Bitcoin has been moved to exchanges, raising concerns about potential sell-offs in the near term.
Key Support Levels to Watch
As of now, Bitcoin is trading at around $85,534, reflecting a 4% decline over the past 24 hours. The critical support level to monitor is $83,000. If Bitcoin fails to hold above this mark, it could fall further to $80,313.
Also Read: Bitcoin Holders Face $1.7B Loss as Panic Selling Hits Market—Is the Worst Yet to Come?
However, Bitcoin’s Relative Strength Index (RSI) has dropped to 25.92, indicating an extremely oversold condition. Historically, when RSI falls below 30, Bitcoin often experiences short-term rebounds. Whether BTC sees a recovery or continues its downward spiral depends on upcoming market events and investor sentiment.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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