A general decline is prevailing across all markets and assets this week. Bitcoin and the cryptocurrency market, which have been trending downwards for weeks, continue to fall this week, while gold and silver, which hit record highs last week, are also declining.
While many macroeconomic factors are considered to have contributed to this decline, Singapore-based analysis firm QCP Capital pointed to Kevin Warsh, who has been announced as a candidate for FED chairman, as the reason for the drop.
According to QCP analysts, BTC fell below $80,000 after Kevin Warsh was announced as the next FED Chairman, triggering a widespread reduction in leverage.
According to analysts, Warsh’s nomination was interpreted by markets as a harbinger of faster monetary tightening.
BTC briefly dropped below $74,500, while Ethereum (ETH) fell below $2,170, liquidating over $2.5 billion in leveraged long positions.
All of this increased downward pressure on prices, further diminishing already tense market sentiment due to continuous ETF outflows, and BTC recorded its fourth consecutive monthly decline.
Has Bitcoin Hit Bottom?
Bitcoin’s drop to the $74,000 level is interpreted on one hand as a signal of entering a bear market, and on the other hand, it is seen as reaching its bottom.
QCP Capital stated that the $74,500 level is considered a technically critical point because it coincides with the 2025 lows.
However, options markets remain cautious. Although put options outnumber call options, there is no atmosphere of panic.
At this point, the decrease in demand for hedging could indicate that investors are beginning to build positions in anticipation of a local bottom.
However, despite all the data, momentum remains downward, and upward movements are limited near recent resistance levels, exposing markets to further liquidation-driven action.
Analysts concluded that $74,000 and $80,000 stand out as two key levels to watch in the short term.
“A sustained close below the $74,000 support level could increase the risk of a deeper decline and pull the price back towards the 2024 trading range.”
Conversely, a decisive return above the 80,000 level could provide short-term relief, allowing volatility to decrease and options to normalize as downside risks are repriced.”
According to analysts, institutional inflows from spot ETFs and moderate statements from the Fed and presidential nominee Warsh appear likely to determine the short-term direction.
*This is not investment advice.