Bitcoin's Free Fall: 5 Key Factors To Understand The Current Crisis

Bitcoin, often considered a safe haven against the volatility of traditional markets, has found itself this week caught in a global storm, fueled by trade tensions between the United States and the rest of the world. After a series of economic shocks, some analysts do not hesitate to compare the current situation to a Black Monday 2.0. But is this really the end of the bull market for Bitcoin or just a simple correction phase? Here are five essential points to remember this week to understand the challenges Bitcoin is facing.

1. A Death Cross: An Alert Signal for Traders

Recently, Bitcoin broke through the 75,000 $ barrier, a threshold that seemed nearly unbreachable.

This drop below this key level, accompanied by the formation of a death cross – a crossing of the 50-day moving average below that of the 200 days – immediately attracted the attention of traders, many of whom fear a more pronounced correction.

Indeed, this bearish signal has raised concerns among analysts, who believe BTC could fall towards $69,000, a level not reached since March 2021.

This decline is set against a backdrop of price compression, where Bitcoin currently fluctuates between $68,000 and $85,000, and where global macroeconomic tensions, fueled by a strong U.S. dollar and rising Treasury yields, exacerbate market volatility.

The drop below these historical supports raises a crucial question: is BTC about to test its lows from 2021, or will we see a quick reversal, supported by corrective action? Market players are divided.

Some analysts are calling for caution, while others mention the possibility of a short-term technical rebound. Especially since, according to Ryan Lee, chief analyst at Bitget Research:

Bitcoin’s stability around $70,000 could benefit from indirect support thanks to mining cost dynamics. Indeed, the current cost to mine one BTC, estimated between $60,000 and $65,000 for operators using advanced ASIC hardware, could create a price floor that would strengthen market resilience. This dynamic, combined with long-term accumulation behavior, could provide a buffer against deeper corrections, also bringing indirect support to Ethereum.

2. U.S. Tariffs: A Headwind for Bitcoin

The impact of new tariffs imposed by the United States has exacerbated tensions in both traditional and crypto markets.

These measures are likely to prolong the pressure on Bitcoin, which has always tended to react negatively to a tense global economic context.

As risky asset prices fall, inflation could rise again, further undermining cryptocurrencies.

Expectations regarding a rate cut by the Federal Reserve (Fed) may provide a short-term reprieve. But if tariffs continue to weigh on the economy, Bitcoin could find itself at the mercy of extreme fluctuations.

3. The Return of the Black Monday Specter and Parallels with 2020

Some experts do not hide their concern about the replication of a Black Monday, similar to that of 1987, or the crash of COVID-19 in 2020.

Such an event could see Bitcoin collapse further under the pressure of economic uncertainty. Many traders fear an additional drop, with concerns about long-term repercussions on the entire cryptocurrency market.

The comparison with the crash of 2020 is not trivial. While global markets plunged into chaos, Bitcoin had shown signs of resilience, but the lack of structural support could weaken it this time.

According to some analysts, the only way to stop this spiral would be for the Fed to take swift action to lower interest rates and restart liquidity in the markets.

4. Speculation: A Key Factor in Bitcoin Volatility

Speculative investors are the most exposed to current market fluctuations. Due to price instability, shorts (selling positions) are becoming increasingly popular, and losses for new investors who bought Bitcoin at its peak are now a factor that intensifies market agitation.

If short-term holders begin to panic, it could lead to massive selling, pushing Bitcoin prices even lower.

The SOPR ratio of short-term investors, a profitability indicator, shows that the vast majority of them are currently at a loss. If this trend continues, a capitulation effect could occur, destabilizing the market even further.

5. A Possible Rebound Nevertheless: Long-Term Optimism

While the situation seems uncertain in the short term, some experts believe Bitcoin could rebound once the turbulence has passed.

In an environment where risky assets are under pressure, Bitcoin has shown impressive resilience over the years.

Analysts suggest that panic selling could offer a buying opportunity at a lower price, especially if global uncertainty intensifies.

Ultimately, the Black Monday 2.0 may not mark the end of the bull market for Bitcoin, but rather a new testing phase for its long-term strength.

Bitcoin, despite its occasional drops, has shown a tendency to rebound after each major crisis. If it is not yet time to buy at a low price, it is essential to monitor the evolution of the situation with caution.