Bitcoin's $500B Plunge: AI Stock Surge, ETF Outflows, and Options Pressure

Bitcoin's price has taken a significant tumble, losing over $500 billion in market value in just a week. The cryptocurrency, once the darling of the investment world, has now crashed to a four-month low of $82,300, a drop of nearly 15% in a week. This sudden crash has triggered massive liquidations, wiping out $770 billion in the last 24 hours.

The Crypto Fear & Greed Index has plummeted to 20, indicating extreme fear in the market. So, what's behind Bitcoin's price drop?

One of the main reasons for Bitcoin's decline is the surge in AI stocks, particularly NVIDIA. The chipmaker reported an impressive $39.3 billion revenue in Q4, showing a 12% increase from the previous quarter and a massive 78% rise year-over-year. This strong performance caused NVIDIA's stock to rally by 4%, adding over $125 billion to its market cap. As investors rushed to invest in high-growth AI stocks, Bitcoin lost momentum, showing a shift in investor confidence from digital assets to AI-related investments.

Another major factor affecting Bitcoin's price is the ongoing outflow from Bitcoin exchange-traded funds (ETFs). According to data, Bitcoin ETFs recorded outflows of $2.43 billion between February 24 and February 26. This marks seven consecutive trading sessions of outflows, showing no signs of stopping. Leading the outflows are major financial institutions, which have increased selling pressure in the market.

Bitcoin is also facing additional pressure due to the upcoming expiration of $5 billion worth of options contracts on February 28. A significant portion of these contracts is set at higher strike prices, making them likely to expire without profit. Data suggests that around 78% of these expiring options, worth $3.9 billion, will not be profitable. Meanwhile, $1.3 billion in Bitcoin has been moved to exchanges, which could lead to more selling.

As of now, Bitcoin is trading at around $85,534, reflecting a 4% drop in the past 24 hours. The key support level to watch is $83,000, as losing this level could push Bitcoin further down to $80,313. On the other