Bitcoin Plunges to $83,500 Amidst Global Recession Fears

Bitcoin's price plummeted to $83,500 on Feb. 26, marking its lowest point since November 2024. This $12,820 drop over three days wiped out over $1 billion in leveraged long positions, according to CoinGlass data. Analysts attribute this bearish mood to growing fears of a global economic recession, as well as pressure from derivatives markets and weaker corporate earnings.

The sell-off coincides with news of US President Donald Trump pushing for tariffs on imports from Canada and Mexico, driving investors toward long-term US Treasurys for safety. Even gold, often seen as a trusted store of value during uncertain times, dropped 2.2% in two days, falling from an all-time high of $2,956 on Feb. 24, reflecting broader market unease.

Unlike well-funded Big Tech firms, Bitcoin offers no dividends or clear way to benefit during an economic downturn. As a result, the S&P 500 serves more as a hedge than a high-risk investment. Analysts like John Butters from FactSet project a strong 16.9% year-over-year earnings growth for the fourth quarter.

Meanwhile, critics argue that Strategy (formerly MicroStrategy) single-handedly pushed Bitcoin's price to $100,000. However, there's no certainty that the company can keep raising funds. Strategy's shares have dropped 19.4% in seven days, signaling investor skepticism about its plan to secure a $42 billion capital increase over three years. This raises doubts about Bitcoin's ability to hold its value without such backing.

For Bitcoin to climb back to $95,000, traders are looking for positive economic signals. Artificial intelligence giant Nvidia will release its quarterly earnings after the market closes on Feb. 26. Many traders fear that the company might struggle due to global tariff conflicts and US export restrictions on processing chips to China. Concerns about an AI bubble are also reducing investors' appetite for risk, as shown by US 5-year Treasury yields dropping to their lowest level since December 2024.

High demand for fixed-income assets, combined with a sharp rise in gold prices, often points to market fear. This is troubling for Bitcoin, especially after outflows from the spot Bitcoin ETFs