encryption市場凌晨flash crash，BTC最均的情况将跌至80000美金？

Author: Lawrence, Mars Finance

At 3:15 am on February 19th Beijing time, the price of Bitcoin suddenly plummeted to $93,300, hitting a new low in nearly two weeks. Although there was a rebound afterwards, rising to $95,400, the magnitude of this fluctuation was astonishing and brought great impact to the market.

The violent fluctuations in the market for derivatives over the past 14 hours have plunged it into chaos. According to Coinglass, in the past 24 hours, 142,439 investors globally have been liquidated, with a total liquidation amount of $344 million. The market's violent swings have triggered panic among investors, while also exposing the vulnerability of the cryptocurrency market.

Differentiation in core asset performance

The encrypted index shows that there is a significant hierarchical phenomenon in the market in this round of adjustments:

Bitcoin: Despite a 3.2% weekly decline, it is still above the 120-day moving average (approximately $93,000).

Ethereum: It touched the key psychological level of $2,600 (down 9.1% from the weekly high) at its lowest, currently rebounded to $2,660, with a volatility of 47% on the 30th.

Shanzhai currency collapses: Solana (SOL) plunges 20%, hitting a low of $160, currently trading at $169, losing all gains since January 13. Dogecoin (DOGE) drops to 0.24, while XRP struggles to hold support near $2.47.

The LIBRA event affects market sentiment

The continued uncertainty in the macroeconomy is affecting the cryptocurrency market, and the 'scam' incident of LIBRA meme coin has further intensified this low sentiment.

QCP Capital's cryptocurrency options trading department pointed out in its market analysis: "Due to the weak performance of ETH and other altcoins, Bitcoin's dominance has risen to 60%, the highest level in four years. The recent scandal involving Argentine President Javier Milei and LIBRA has also weakened people's confidence in altcoins and meme coins."

Additionally, since the Fed paused its hawkish interest rate policy in January, the upside of Bitcoin has been limited. Fed board member Patrick Harker has recently maintained a hawkish stance, stating that interest rates will continue to be stable until inflation is under control. This bearish sentiment has kept the price of Bitcoin below $100,000 for the past two weeks, but Bitcoin's market dominance (BTC.D) has risen to over 60%, further suppressing the rebound of altcoins.

Analyst Jamie Coutts believes that the market may experience another rally before Bitcoin potentially rebounds.

Bitcoin's cross-exchange liquidity pulse turns bearish

Bitcoin exchange inter-flow pulse chart. Source: CryptoQuant

According to the analysis of on-chain analyst Maartunn, the Inter-exchange Flow Pulse (IFP) of Bitcoin has turned negative, indicating a decrease in risk appetite among potential investors. The IFP indicator measures the flow of Bitcoin between the spot and derivatives markets. Historical data shows that when the market is bullish and investor sentiment is high, more Bitcoin will move from spot to derivatives markets. Conversely, when the market weakens, Bitcoin will flow out of the futures market and into spot exchanges, indicating investors' expectation of price decline.

On February 16th, the IFP indicator turned negative for the first time since the third quarter of 2024, indicating that market sentiment may be undergoing a change. Bitcoin researcher Axel Adler Jr also pointed out that long positions in Bitcoin futures have reached the highest level in two years. This is similar to the situation in January 2022, when the liquidation of long positions marked the beginning of a bear market.

Bitcoin futures long and short liquidation dominance chart. Source: X.com

However, Adler stated that the market responded to the pressure, indicating that buyers remain active during the adjustment period, 'buying on dips,' thereby limiting the extent of Bitcoin's decline.

However, for the bulls, the situation is not completely out of control, as Adler added,

"Currently, the market has responded fully to this pressure, which actually indicates strong demand during the adjustment period. Buyers are actively "buying on dips", limiting the depth of the bitcoin's decline."

The worst case for Bitcoin will fall to around $80000.

Since February 3rd, Bitcoin has been consolidating in the range of $95,000 to $99,000. In the past two weeks, the $95,000 support level has been tested five times. Continued testing of the support level may weaken the effectiveness of this range and increase the risk of breaking through the support. Therefore, Bitcoin may close below $95,000 for the first time in the upcoming trading sessions.

If the support level is breached, the price may further decline to the range between 91,130 US dollars and 88,909 US dollars. If the market continues to be bearish, the price may retrace to the range between 81,699 US dollars and 85,160 US dollars, which is the price range during the early "Trump rally" rebound of Bitcoin.

CME's daily gap still remains between $77,000 and $80,000, which could be the worst case scenario for Bitcoin, implying a further 15% potential drop in Bitcoin price.