Why is Bitcoin still plunging?

Global financial markets are in turmoil, and Bitcoin, long considered a safe haven by crypto enthusiasts, is no exception. After starting a rally, the flagship cryptocurrency has abruptly fallen back into “extreme fear” territory, raising many questions. As long positions collapse and technical signals deteriorate, concern is growing among investors.

The fall of Bitcoin and the return of fear

Bitcoin, once celebrated for its resilience in the face of traditional market fluctuations, has recently shown worrying signs of weakness. On Monday, its price plunged to a low of $58,134, sending the Fear and Greed Index down sharply to 25 points and signaling a return to a state of “extreme fear” among investors. The drop, while sharp, is not an isolated event. It is part of a series of tremors that have seen Bitcoin lose nearly $10,000 in a matter of days, a plunge widely attributed to contagion from global stock markets.

The plunge comes after a week of intense volatility. Last week, Bitcoin had already fallen as low as $49,557 before quickly rebounding to regain the $60,000 threshold. This resurgence was fueled by the resilience of institutional investors, despite the lack of inflows into BlackRock’s exchange-traded fund (ETF), a frequently scrutinized indicator of sentiment by the market. However, the recovery was short-lived, as bulls failed to maintain the momentum needed to stabilize the price above this crucial psychological threshold.

Worrying technical signals and an uncertain horizon

As the Bitcoin market attempted to stabilize, another blow clouded the outlook: the formation of a “death cross”a dreaded technical indicator that occurs when the short-term moving average crosses below the long-term moving average. Often interpreted as a sign of an impending bearish reversal, this indicator has reinforced negative sentiment in the market. While it does not guarantee an immediate decline, it is nonetheless a cautionary signal for investors already shaken by recent volatility. The lack of new bullish catalysts and the persistent pressure on global equity markets are exacerbating this climate of uncertainty.

While the resilience of institutional investors offers a glimmer of hope, the market now seems to be hanging on the evolution of macroeconomic indicators and traditional stock markets. Only with renewed stability and a clearer outlook will Bitcoin be able to break free from this spiral of fear and regain bullish momentum.