Bitcoin Drops 36% From High, Recession Fears Grow

Bitcoin's recent price action has drawn significant attention from investors as the leading cryptocurrency continues its downward trend from its all-time high. The price dip comes amid broader market concerns and shows patterns typical of bull market corrections. Bitcoin hit a four-month low of $76,606, with both cryptocurrency and stock markets experiencing a global downturn. Economic recession fears are growing, with the S&P 500 dropping nearly 8% over the past month, indicating that the broader market downturn isn't limited to crypto. Recent data from prediction market shows a 39% chance of a US recession in 2025, up from 23% in February.

Crypto entrepreneur Arthur Hayes weighed in on the situation, predicting that Bitcoin will likely find a bottom around $70,000. Hayes described this potential 36% correction from January’s all-time high of $108,786 as “very normal” in a bull market and urged crypto investors to remain patient during this period. According to Hayes, once Bitcoin hits $70,000, traditional markets would need to experience a sharp decline, including drops in the S&P 500 and Nasdaq, along with some major financial institution failures. Such events would likely prompt central banks to start quantitative easing, creating what Hayes calls an “optimal buying opportunity.”

Onchain analytics firm has identified a key factor in the current sell pressure. Their data shows that buyers who purchased near the $109,000 all-time peak in January are now panic-selling. This is described as a “moderate capitulation event” with “intense loss realization.” The data shows a clear pattern of short-term holders exiting their positions. The average purchase price for short-term Bitcoin holders is currently $91,362. With Bitcoin trading around $81,930, these holders face an average unrealized loss of about 10.6%. Analysis indicates short-term holders are “deeply underwater” between price points of $71,300 and $91,900, suggesting the probability of forming a temporary floor in this zone is “meaningful.”

Despite the downward pressure, some indicators suggest a potential trend reversal. Bitcoin’s Relative Strength Index is at its lowest level since August 2024, which could signal an upcoming recovery. Additional hope comes from the US dollar index, which recently experienced one of its largest weekly declines, potentially setting up favorable conditions for risk-on assets like Bitcoin. At the time of writing, Bitcoin is trading at $80,008, showing a slight 0.1% increase in the past 24 hours. The cryptocurrency has bounced back 7.5% over the past day as markets stabilized.