Bitcoin Drops 2.43% Amid U.S. Economic Uncertainty

Bitcoin's price has experienced a notable decline, dropping by 2.43% over the past 24 hours, currently trading at $80,338. This downturn comes amidst broader economic uncertainty in the U.S., which has left investors feeling pessimistic and added to the overall fear in risk markets.

The decline in Bitcoin's price has been accompanied by a reduction in leveraged positions. According to CryptoQuant, the Futures Estimated Leverage Ratio (ELR) has been in the negative territory since January 29, indicating that traders are reducing their leverage as their risk appetite diminishes. At the time of writing, the ELR was around -0.13, suggesting a strong bearish sentiment in the market.

This bearish trend is largely attributed to political and economic uncertainties surrounding U.S. policies. The U.S. government's agenda has added to the fear in risk markets, prompting traders to secure their positions and reduce risk exposure. The Coinbase Premium Index has remained negative for the past two weeks, indicating that U.S. investors are selling without institutional accumulation, further contributing to the bearish market sentiment.

Adding to the bearish sentiment is the movement of dormant coins. Notably, 8,000 BTC that had remained inactive for three to five years have recently become active. If these coins are transferred to exchanges, it could lead to a sell-off, as historically, the movement of older coins has created substantial selling pressure. The Exchange Netflow has turned positive with over 1.6k BTC, suggesting significant inflow into exchanges. Over the past day, more than 50k BTC flowed into exchanges, indicating strong bearish sentiments.

With investors reducing their leveraged positions, the market's bearish sentiment is likely to persist. Bitcoin's future trajectory is closely linked to the U.S. economy and macroeconomic policies. Until the U.S. economy stabilizes, Bitcoin's volatility is expected to continue. If the current trend persists, Bitcoin could drop again to $77,592. However, a shift in market sentiment, as the U.S. economy cools down, could see Bitcoin move to $84,000, restoring market confidence and boosting the cryptocurrency to higher levels.