Bitcoin Drops 10% to $82,000, Traders Fear Correction

Bitcoin experienced a significant downturn on March 10, with its price falling below $82,000, causing ripples of concern across the cryptocurrency market. This decline follows a period of steady gains, leaving traders uncertain about whether this is a temporary setback or the beginning of a more substantial correction.

Arthur Hayes, the chief investment officer at Maelstrom and co-founder of BitMEX, described Bitcoin’s performance as an “ugly start” to the week. He anticipates that Bitcoin may face resistance at $78,000 and suggests that if the price fails to stabilize above this level, the next significant support zone could be around $75,000.

Investors, particularly those new to the market, have expressed worries about the drop. Market analysis firm 10x Research characterized the dip as a “classic correction,” noting that traders who bought Bitcoin in the last 12 weeks were responsible for about 70% of the selling pressure. This panic selling by new investors could exacerbate market volatility.

The Bitcoin Fear and Greed Index has plummeted to a reading of 20, indicating “extreme fear” among traders. This stark contrast to the recent optimism suggests that traders are on edge, which could lead to more short-term price fluctuations. Additionally, a significant portion of Bitcoin options are concentrated between $70,000 and $75,000, meaning that as Bitcoin approaches these levels, traders may adjust their positions, further increasing volatility.

The upcoming US inflation report is expected to have a substantial impact on Bitcoin’s trajectory. Investors are closely monitoring the US Federal Reserve’s monetary policy, as any indication of tighter or loosened financial conditions could influence Bitcoin’s price. A higher-than-expected inflation rate could lead to additional rate hikes, putting pressure on risk assets, including Bitcoin. Conversely, a decrease in inflation could reduce market volatility and promote stability.

As of now, traders are closely watching the $78,000 level. A successful hold above this level could boost confidence, while a break below it could result in further losses. Such sharp movements are becoming more common as Bitcoin continues to evolve as an asset.