Bitcoin Market Analysis: Price Volatility and Recovery Amid Global Economic Uncertainty (2025/02/28)

Summary

Bitcoin experienced significant price volatility on February 28, 2025, dropping below $80,000 overnight before recovering to around $84,000 during U.S. trading hours. This represents a 15-26% decline from recent all-time highs and marks Bitcoin's worst week since the 2022 FTX collapse. The volatility is attributed to several key factors: tariff concerns from the Trump administration, global liquidity conditions, investor sentiment shifting to "extreme fear," and broader risk-off sentiment in global markets.

Key Market Movements

  • Price Action: Bitcoin fell as low as $78,226 overnight before recovering to approximately $84,000 during U.S. trading hours

  • Weekly Performance: Down more than 11% for the week, heading for its worst week since the 2022 FTX collapse

  • Monthly Performance: On track for its worst month since June 2022

  • All-Time High Comparison: Currently down 25-26% from this cycle's all-time high reached in January 2025 on Trump's inauguration day

Contributing Factors

Macroeconomic Environment

  • Trump Tariff Policy: Tariffs of 25% against Mexico and Canada, and 10% against China are scheduled to begin on Tuesday, March 4, 2025

  • Global Liquidity: Bitcoin maintains a 0.94 correlation with global liquidity over the long term

  • Global M2 Money Supply: Grew from $102 trillion to $107 trillion (3.8% increase) since the start of 2025

  • U.S. Debt Ceiling: Recently raised by another $4 trillion on February 25, 2025

Market Sentiment

  • Crypto Fear & Greed Index: Dropped to 10 overnight (lowest since 2022 bear market) before recovering to 16, still in "extreme fear" territory

  • ETF Outflows: Bitcoin ETFs experienced $2.7 billion in outflows this week, heading for a record week of outflows

  • Liquidations: $397 million in long liquidations in the past 24 hours according to CoinGlass

  • Weekend Concerns: Historically, weekends have shown negative price action for Bitcoin in recent weeks

Technical Indicators

  • Relative Strength Index (RSI): Fell to 25, suggesting oversold conditions (values below 30 typically indicate oversold)

  • MVRV Z-score: Currently at 2, below the overvaluation threshold of 4, suggesting room for further price appreciation

Cryptocurrency Market Performance

  • Solana (SOL): Up 5-6% following CME's announcement to add SOL futures on March 17 and SEC clarification that meme coins are not securities; still down 36% for the month

  • Crypto-related Stocks: Coinbase (+3.5%), Robinhood (+2.7%), and MicroStrategy (+6.5%) all showed positive movement

Expert Perspectives

  • Geoffrey Kendrick (Standard Chartered): Maintains $200,000 Bitcoin price target for 2025 despite the current pullback

  • Some Analysts: Warning that Bitcoin could drop further to $70,000

  • Market Expectations: Bitcoin might bottom out by April, approximately 60 days after recent liquidity shifts began

Notable Events

  • Bybit Hack: Major cryptocurrency exchange Bybit suffered a $1.5 billion hack, estimated to be the largest crypto heist in history

  • SEC Decision: The SEC clarified on February 27 that meme coins are not considered securities

Despite current volatility, the long-term outlook for Bitcoin remains constructive as global liquidity continues to expand, with valuation metrics suggesting the cryptocurrency is not yet in overvalued territory.

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