Bitcoin's 90-Day Stagnation Ends with Sudden Plunge

Bitcoin has been trading within a familiar range for over 90 days, oscillating between $91,000 and $102,000, with no clear signs of a breakout. The market's growth momentum appears to have stalled.

On Friday, February 21, the market experienced a sudden shakeup following news of a hack on ByBit and a sell-off in S&P 500 options. Bitcoin plummeted 4.7% in a single day, reaching a low of nearly $95,000 before recovering over the weekend.

The crypto market, including Bitcoin (-5.9%), Ethereum (-16.9%), and Solana (-33.1%), has been adjusting after significant gains in late 2024. Notably, memecoins, which surged in December, have also seen a significant decline of 37.4% in February.

The market's downturn is exacerbated by global financial market instability and Bitcoin's increasing correlation with traditional assets. The S&P 500's failure to reach the 6,000 milestone has dampened investor sentiment and reduced participation in risky assets.

Institutional demand has also decreased significantly. The inflow of funds into Bitcoin ETFs, which peaked at 18,000 BTC per day in November 2024, has reversed. On February 20 alone, $360 million was withdrawn from Bitcoin ETFs. Additionally, leveraged trading activity has declined, indicating a shrinking market.

After nearly 90 days of consolidation, Bitcoin is awaiting a strong catalyst to ignite a rally. The market's direction will likely depend on macroeconomic factors. Meanwhile, the US economy is facing challenges, with consumer confidence declining and inflation expectations rising, potentially undermining the Federal Reserve's efforts to control prices.

The housing market is also slowing down, with new home construction decreasing by 8.4% in January. While harsh winter storms may have contributed to some project delays, the primary issue lies in the rising costs of materials due to import tariffs and high mortgage rates.

The crypto market is caught in a tug-of-war between bullish and bearish forces. Strategy™ has announced plans to issue $2 billion in convertible bonds to purchase more Bitcoin and fund business operations.