US President Donald Trump’s surprise appointment of former Fed Governor Kevin Warsh as Federal Reserve chairman boosted the dollar, dampened the rise in precious metals and pushed bitcoin back below a key support level.
Onchain data shared by Glassnode shows that Bitcoin was consolidating just above key structural support around $83.4k, the lower bound of its basic near-term cost of ownership model.
A break below this zone could open the door for a deeper decline towards $80.7k, the so-called true market average.
This outage is occurring. Over the past 7 days, Bitcoin lost more than 9.2% of its value and is now trading at $81,200.
The broader market, measured via the CoinDesk 20 Index (CD20), lost 12.4% of its value over this period. This means that the Crypto Fear & Greed Index fell to “extreme fear” during the week.
Glassnode’s report notes that short-term holder supply remained in deficit, with BTC above this level remaining at 19.5%, well below the 55% capitulation threshold, suggesting some resilience despite downward pressure. However, buyers’ conviction is being tested as prices fall.
On the derivatives side, funding rates remain moderate, reflecting a cautious speculative appetite. Options markets are pricing in increased demand for downside protection, with broker gamma negative below $90,000. This increases the risk of volatility spikes in the event of a breakdown of support.
Taken together, the data paints a picture of a market that is fragile but not yet broken. Liquidity remains the key variable.
The crypto market may currently be gripped by fear, but this could be a good signal.
According to crypto analytics platform Santiment, sentiment in various cryptocurrency communities has plunged to extremely low levels, levels that have historically preceded price recovery.
In a report, Santiment highlighted the rise in bearish comments on social media as a rare bright spot in an otherwise gloomy environment.
“As network fundamentals stagnate, crowd sentiment has reached extreme levels of negativity,” the company wrote. “Historically, this excessive downtrend is a strong contrarian indicator of approaching a local bottom.”
As prices have fallen over the past few months, long-term bitcoin holders are selling at the fastest pace since August. Cryptocurrency prices fell during the week, apparently due to a reversal in the decline of the US dollar.
Some industry observers, however, believe that the current mood could be short-lived.
Matt Hougan, the CIO of Bitwise, recently joined CoinDesk’s Markets Outlook, where he said crypto is in the late stages of a bear market bottom. Historically, crypto markets have tended to move in the opposite direction of the crowd, the report points out.
