Bitcoin Finds Footing After Sharp Decline
Bitcoin has demonstrated signs of stabilization after experiencing a significant downturn that brought it close to its lowest levels since Donald Trump's return to the White House. The world's largest cryptocurrency rose as much as 3.7 percent to reach US$79,284, recovering from earlier losses that saw it slip to its weakest position since early April. This recovery follows a particularly challenging weekend during which Bitcoin dropped nearly 10 percent, marking a continuation of the volatility that has characterized cryptocurrency markets in recent months.
Technical Analysis Points to Potential Support Levels
Market analysts suggest that the recent price decline may have positioned Bitcoin for a potential rebound. Joel Kruger, a markets strategist at LMAX Group, noted that "from a technical perspective, the recent drawdown is bringing price closer to attractive levels." He indicated that Bitcoin could find "strong support" should it drop to around US$70,000, a level that represents a critical psychological threshold for investors and traders.
Other market observers echo this cautious optimism while acknowledging ongoing challenges. Caroline Mauron, co-founder of Orbit Markets, warned that "a further drop through the 2021 highs around US$70,000 would represent a damaging long-term confidence hit" for the cryptocurrency market.
Broader Market Context and Historical Performance
The cryptocurrency's recent struggles occur within a broader context of market uncertainty. Bitcoin shed nearly 11 percent in January alone, marking its fourth consecutive monthly decline—the longest losing streak since 2018, following the boom and subsequent crash of initial coin offerings. This represents a significant reversal from last year's performance, when a pro-crypto White House and surging institutional adoption sent Bitcoin to a record price above US$126,000.
Since reaching that all-time high, Bitcoin has plummeted approximately 40 percent, reflecting the volatility that continues to define digital asset markets. Other major cryptocurrencies, including Ether and Solana, have followed similar patterns, staging modest rebounds after experiencing declines earlier in the trading week.
Federal Reserve Appointment Adds to Market Uncertainty
The deepening market rout coincided with President Donald Trump's nomination of Kevin Warsh as the next Federal Reserve chair. Warsh, who developed a reputation as an inflation hawk during his previous tenure as a Fed governor, represents a significant shift in monetary policy direction. This appointment prompted investors to reconsider their positions on the U.S. dollar, reversing earlier bets on currency weakness that had been anticipated following Jerome Powell's term conclusion in May.
The changing leadership at the Federal Reserve introduces additional uncertainty into financial markets, with cryptocurrency investors particularly sensitive to shifts in monetary policy and regulatory approaches.
Exchange-Traded Fund Outflows Continue to Pressure Prices
Another significant factor influencing Bitcoin's performance has been persistent outflows from exchange-traded funds (ETFs). Since their launch in January 2024, Bitcoin ETFs have emerged as one of the most important price drivers for the cryptocurrency. Recent data reveals concerning trends, with investors pulling almost US$1.5 billion from U.S. Bitcoin ETFs last week alone—the second-largest weekly outflow on record.
This substantial withdrawal capped the longest-ever streak of monthly outflows from Bitcoin ETFs, creating sustained downward pressure on prices. Timothy Misir, head of research at digital asset analytics firm BRN, emphasized that "for crypto specifically, ETF flow stabilization is the key signal to monitor. Without it, rallies are likely to fade."
Market Sentiment and Future Outlook
Market participants remain cautious about the near-term prospects for Bitcoin and other cryptocurrencies. Damien Loh, chief investment officer at Ericsenz Capital, observed that "the underlying sentiment remains bearish in the short term. Crypto is tracking overall asset markets and not moving in isolation." He projected that Bitcoin could find a low in the US$70,000 to US$74,000 range, with potential highs reaching around US$90,000.
The recent volatility has resulted in significant liquidations, with nearly US$590 million of bullish bets being liquidated within a 24-hour period according to Coinglass data. As risk sentiment deteriorated, broader markets in Asia declined, while traditional safe-haven assets like gold and silver extended a slump that began late last week.
Despite these challenges, some analysts see potential for recovery as prices approach what they consider attractive entry points. The coming weeks will likely be crucial for determining whether Bitcoin can establish a sustainable foundation for growth or whether further declines await the world's most prominent cryptocurrency.
