As of March 4, cryptocurrencies continued their downward trend, deepening losses after the widespread market sell-off in the previous session. Not even Donald Trump’s announcement of a cryptocurrency reserve—including Bitcoin, Ethereum, Cardano, Ripple, and Solana—was enough to sustain optimism in the sector.
Bitcoin has dropped more than 3.5%, while Cardano and Ripple have declined by 5% and 8%, respectively. Ethereum is also down 3% on the day. Some of the key factors impacting the market include the low demand for Bitcoin ETFs and the capitulation of short-term holders, who are now facing average losses of 8%.
Bleak Outlook for a Strong Rebound
Wall Street has also had a rough time, with the S&P 500 recording its weakest session of the year yesterday. Additionally, concerns are mounting over Bitcoin’s response to a potential economic slowdown in the U.S., especially as inflation expectations rise. The massive sell-off of assets tied to the “Trump Trade” and the tech sector has also hit riskier assets like Bitcoin and altcoins.
Investors are closely watching recent U.S. economic data, which indicates signs of weakening. The ISM Manufacturing report showed a decline in orders and employment, along with rising prices. If risk aversion sentiment persists, Bitcoin could once again test recent lows around $78,000, with the risk of dropping further to the $72,500 – $73,000 range, where Glassnode data suggests stronger volume accumulation.
Technical Analysis and ETF Outflows
From a technical perspective, Bitcoin has fallen below the key support level of the 200-day EMA, signaling increased selling pressure. Additionally, significant Bitcoin outflows have been recorded in ETFs, particularly in BlackRock’s IBIT. The declining capital inflows into these investment vehicles put the market in a delicate position, as it has largely relied on the momentum generated by Bitcoin ETFs in the U.S.
Despite a 30% drop from December highs, total Bitcoin holdings in ETFs have not decreased drastically, indicating that major investors are still holding long-term positions despite recent volatility.