Bitcoin tumbled to a three-month low on Sunday, briefly dipping below $87,000, as a wave of liquidations triggered widespread sell-offs. The drop, which saw Bitcoin slide by 13% in February, has led analysts to warn that the bottom may not yet be in sight.
Data from Cointelegraph Markets Pro and TradingView showed Bitcoin hitting a low of $86,314 on Bitstamp, marking its weakest level since November 15, 2024. The decline sent market sentiment into "extreme fear," as measured by the Crypto Fear & Greed Index.
A significant liquidity cascade accompanied the price drop, with crypto tracking platform CoinGlass reporting that total 24-hour market liquidations exceeded $1.5 billion. Bitcoin alone accounted for the bulk of long position liquidations, indicating that leveraged traders were caught off guard by the sudden downturn.
The latest sell-off has put pressure on a key Bitcoin support level. Crypto investor and entrepreneur Alistair Milne noted that Bitcoin's daily Relative Strength Index (RSI) had fallen below 30, entering oversold territory for the first time since August 2023. "Bitcoin touches oversold territory on the daily for the first time since August last year (when Bitcoin crashed to $49K)," Milne wrote on X. "Being oversold (or even close to) on the daily is one of the most reliable indicators of bottom/reversal territory. Only happens a handful of times per year."
Some analysts, however, are urging caution. Geoffrey Kendrick, global head of digital assets research at Standard Chartered, advised investors against buying the dip prematurely. "Do not buy the dip yet," Kendrick wrote in a note on Tuesday, adding that Bitcoin could still fall to the "low 80s."
Kendrick suggested that a large outflow from Bitcoin exchange-traded funds (ETFs) could be a sign of further downside. "Before buying the dip is attractive, I think we get a $1 billion ETF outflow day," he noted. Investors have withdrawn over $1 billion from Bitcoin ETFs in the past trading week, with $500 million in outflows recorded on Monday alone.
Market observers have pointed to a lack of new catalysts driving Bitcoin's price, with some institutional investors taking profits amid the uncertainty. BitMEX co-founder Arthur Hayes warned that Bitcoin could sink as low as $70,000. Meanwhile, JPMorgan analyst Nikolaos Panigirtzoglou said last week that cryptocurrencies were struggling due to weak demand from both retail and institutional buyers.
The downturn has also forced ETF investors into a difficult position. Standard Chartered estimates that most Bitcoin ETF buyers since November acquired shares at an average Bitcoin price of $96,500, meaning many are now holding significant unrealized losses.
Despite short-term headwinds, some analysts maintain a bullish long-term outlook. Standard Chartered has previously predicted that Bitcoin could reach $200,000 this year and $500,000 by the end of President Donald Trump's second term. However, Anthony Georgiades, founder and general partner at Innovating Capital, cautioned that macroeconomic conditions could play a crucial role in Bitcoin's price movement. "Fed policy and broader market conditions will likely play a role in Bitcoin's price action, at least in the short term," Georgiades told DL News.
Meanwhile, Bitcoin's historical support levels remain in focus. Data from CryptoQuant suggests that "newer" Bitcoin whales-investors who have held BTC for up to six months-have a cost basis just below the $90,000 mark, providing a key level of potential buying interest. The realized price of these investors is estimated at $89,200, reinforcing the importance of this zone as a critical support level.
