A widespread downturn is evident across various markets and asset classes this week. Bitcoin and the broader cryptocurrency sector, which have been experiencing a downward trend for several weeks, continue to slide. Similarly, precious metals like gold and silver, despite reaching record highs last week, are now also facing declines.
While multiple macroeconomic elements are believed to contribute to this slump, Singapore-based research firm QCP Capital attributes the recent drop primarily to Kevin Warsh’s nomination as the prospective Federal Reserve chairman.
QCP analysts report that following Warsh’s announcement as the next FED Chairperson, Bitcoin (BTC) slipped below $80,000. This development triggered a significant deleveraging across markets.
The market interpreted Warsh’s appointment as an indication of accelerated monetary tightening policies ahead.
Bitcoin briefly dipped under $74,500 while Ethereum (ETH) dropped beneath $2,170. These moves resulted in over $2.5 billion worth of leveraged long positions being liquidated.
This cascade intensified selling pressure on prices and further dampened already fragile market sentiment amid ongoing ETF outflows. Consequently, Bitcoin recorded its fourth consecutive monthly loss.
Is Bitcoin Approaching Its Lowest Point?
The fall of Bitcoin towards the $74,000 mark is viewed from two perspectives: one signaling entry into a bear market phase; another suggesting it might be nearing its bottom price level.
According to QCP Capital’s analysis, the $74,500 threshold holds technical significance since it aligns with lows projected for 2025.
Despite this bearish outlook in spot prices though options markets remain relatively guarded—put options exceed call options but without triggering panic among investors.
A decline in demand for hedging instruments at present could imply that some investors are starting to accumulate positions anticipating a local bottom formation soon.
Nonetheless all indicators show momentum still favors downside risks with limited upward movement near recent resistance zones exposing markets vulnerable to further liquidation events driven by forced selling pressures.
The analysts emphasize watching two critical levels closely over short-term horizons: $74,000 support and $80,000 resistance points.
“If prices close persistently below the support at $74,000, there is an increased chance of deeper corrections potentially dragging values back toward ranges seen throughout 2024,”
“Conversely, breaking decisively above $80,000 could offer temporary relief allowing volatility reduction along with normalization in option pricing reflecting recalibrated downside risk expectations.”
The short-term trajectory appears influenced heavily by institutional capital inflows via spot ETFs combined with measured communications from both Federal Reserve officials and nominee Kevin Warsh.
*Please note this information does not constitute financial advice.*