Bitcoin Traders Face Possible 70% Drawdown with $38K Target in Play

Bitcoin fell to $63,295.74 on Thursday, its weakest level since October 2024. The cryptocurrency is down nearly 50% from its October peak of $126,198 and has lost about 12.6% in one day according to reports. Roughly $1 billion in Bitcoin positions have been liquidated in the past 24 hours.

The global crypto market has lost $2 trillion in value since hitting a peak of $4.379 trillion in early October. Ether, the second-largest cryptocurrency by market cap, is down 13% at $1,854 according to market data. Bitcoin ETFs have seen outflows of over $3 billion in January alone.

MicroStrategy (MSTR) has recorded a $12.6 billion net loss in Q4 2025, largely due to its Bitcoin holdings. The company now faces over $9.5 billion in unrealized losses on its 713,502 BTC holdings. MSTR shares have fallen more than 75% since July.

Why Did This Happen?

Bitcoin has been negatively impacted by macroeconomic concerns and the nomination of Kevin Warsh as the next Fed Chair. Warsh's potential hawkish stance could lead to a smaller Fed balance sheet, which historically has been a tailwind for crypto. The Fed's recent pause on rate cuts has also contributed to risk-off sentiment.

The broader tech sector has also seen selling pressure. Bitcoin's performance has been closely tied to tech stocks, particularly those in AI, which have been under renewed pressure. The S&P 500 hit a seven-week low, and the Nasdaq fell to its lowest in over two months.

How Markets Responded

Shares of companies holding Bitcoin and other digital assets have been hit hard. MicroStrategy, Nakamoto Inc., and Metaplanet have all seen their stock prices fall by double digits. Altcoins like Ethereum, BNB, and Solana have also experienced sharp declines.

Bitcoin ETF outflows have accelerated the sell-off. Investors have pulled over $1 billion from the funds in the past week alone. The average investor in Bitcoin ETFs is now down about 23%. These outflows may continue to pressure Bitcoin prices.

What Analysts Are Watching Next

Bitcoin is currently trading below key moving averages, including the 50-day, 100-day, and 200-day EMA according to technical analysis. The RSI is at 18.6, indicating an oversold condition. Analysts are watching for a break below $70,000, which could lead to further declines.

Some analysts predict Bitcoin could fall to $38,000, a 70% drawdown from current levels. Others see potential stabilization as on-chain indicators show reduced supply from profitable addresses. The next few weeks will be critical as investors await data from the upcoming FOMC meeting on March 17–18.

Market watchers are also closely monitoring the performance of Bitcoin ETFs and the potential for forced liquidations among crypto miners. The outcome could determine whether this correction turns into a deeper bear market.