Bitcoin Tests $85K Support Amid $1B Liquidation Risk

Bitcoin's price has been under pressure, approaching critical support levels, with potential long liquidations exceeding $1 billion. Recent price movements and ongoing ETF outflows have contributed to the bearish sentiment. Hong Yea, co-founder of GRVT, notes that the $85,000 level is crucial, as a break below this support could trigger further declines.

Analysts warn of significant risks as Bitcoin approaches the $85,000 support level. Increased market volatility suggests that a sustained drop below this mark could catalyze an extensive liquidation event, impacting over $1 billion in leveraged long positions across exchanges. The recent downturn has been exacerbated by a sharp increase in outflows from Bitcoin exchange-traded funds (ETFs), with a record net outflow of over $516 million reported on February 24, marking six consecutive days of selling.

Market sentiment remains cautious following Bitcoin's decline to a three-month low of approximately $87,629. This signals a robust bearish trend as the psychological support level of $90,000 was breached for the first time since mid-January. Ryan Lee, chief analyst at Bitget Research, identifies the diminishing risk appetite among crypto investors as a critical factor in the current sell-off. The lack of bullish catalysts raises concerns about Bitcoin's ability to regain its footing without a robust influx of investment.

Geopolitical uncertainties and broader economic conditions contribute to Bitcoin's fragile standing. Hong Yea emphasizes that geopolitical concerns, economic uncertainties, and unpredictable policy changes affecting broader business and economic issues could drag BTC below $85,000 in the short term. Additionally, the recent Bybit hack, the largest in crypto history with $1.4 billion in losses, adds to the existing market turmoil, although experts believe its long-term impact may be limited.

Traders and market participants will need to monitor Bitcoin's price movements closely as it tests these critical support levels. Potential rebounds could arise if market sentiment shifts positively. However, analysts caution that continued outflows from ETFs and external market pressures may keep the bears in control. In summary, Bitcoin is at a pivotal juncture where it faces significant risks of long liquidations if it cannot hold above the $85,000 mark. The current market volatility, compounded by outflows from ETFs and external economic pressures, poses substantial challenges