Bitcoin (BTC USD) rout fueled by ‘crisis of confidence,’ analyst says - is more pain ahead for crypto market?

Bitcoin crisis of confidence: Bitcoin (BTC USD) hovered close to $70,000 on Tuesday, showing signs of stability after last week’s sharp sell-off and rebound that shook investor confidence.

Bitcoin (BTC USD) Still Down 45% From All-Time High Above $126,000

The cryptocurrency remains about 45% below its all-time high above $126,000 set last October, when forced liquidations and heavy selling by large holders triggered a broader downturn in the crypto market.

Worst Daily Bitcoin Price Drop Since 2022 Shakes Investor Confidence

Selling pressure escalated again last week, with Bitcoin posting its worst single-day decline since November 2022 before briefly dipping to around $61,000 and rebounding by Friday.


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Analyst Calls Bitcoin Rout a ‘Crisis of Confidence’

Some analysts believe the recent turbulence reflects sentiment rather than deeper structural issues. Bernstein analyst Gautam Chhugani described the latest price action as a “crisis of confidence,” saying there was no fundamental breakdown behind the sell-off, as per a report.

Chhugani wrote in a note on Monday that, "The current bitcoin price action is a mere crisis of confidence. Nothing broke, no skeletons will show up," as quoted by Yahoo Finance.

Bernstein Says BTC USD Bear Case Is Weakest in History

He added that in an AI-driven world, Bitcoin and crypto may appear less compelling, but argued that the “bitcoin bear case is the weakest in its history," as quoted by Yahoo Finance.

Bitcoin ETFs See Limited Outflows During Market Turmoil

Chhugani also pointed to the relatively limited impact on spot Bitcoin ETFs, noting that they recorded only about a 7% outflow even as Bitcoin prices fell roughly 50% during last week’s sell-off.

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Quantum Computing Not an Immediate Threat to Bitcoin

Addressing concerns around quantum computing, he said the threat to Bitcoin’s encryption is not imminent and that the blockchain can adapt with backing from major players such as Strategy, BlackRock, and Fidelity.

BTC USD Price Prediction: Bitcoin Price Target Set at $150,000 by Year-End

Looking ahead, Chhugani expects Bitcoin to reach new all-time highs, setting a price target of $150,000 by the end of the year, as per the Yahoo Finance report.

Strategy Adds 1,142 BTC as Institutional Buying Continues

CoinSwitch Markets Desk told The Economic Times that, Bitcoin trading in a narrow range between $68,000 and $71,000, as traders remain cautious amid bearish sentiment and a lack of near-term catalysts. The note added that markets appear to be waiting for cues from other asset classes before capital flows back into Bitcoin. On the institutional side, Strategy added 1,142 BTC in the first week of February, spending roughly $90 million at an average price of $78,815.

Key Bitcoin Support and Resistance Levels to Watch

From a trading perspective, CoinSwitch said a move above $71,800 could spark a short squeeze toward the $73,000–$74,000 range, while a drop below $69,500 could open the door to a decline toward the $66,000–$68,000 support zone, as per an emailed statement to The Economic Times.

Extreme Fear Persists but Signs of Stabilization Emerge

CoinDCX Research also described Bitcoin as being in a phase of horizontal consolidation around $70,000, with muted price action on both the bullish and bearish sides. CoinDCX Research told The Economic Times that 24-hour trading volume has fallen sharply, from more than $300 billion to around $111 billion, signaling reduced activity. While broader market sentiment remains in extreme fear, CoinDCX said the market is showing early signs of stabilization.

Fundstrat Leaves Room for Possible Bitcoin Dip Into $50,000 Range

Fundstrat’s head of digital assets, Sean Farrell, said last week that he increased net long exposure to 80% in his portfolio, while still leaving room for the possibility of another move into the $50,000 range, as per the Yahoo Finance report.

FAQs

What does Bernstein say about the Bitcoin drop?

Bernstein called it a “crisis of confidence,” saying there was no fundamental breakdown.

Are Bitcoin ETFs seeing heavy outflows?

No, spot Bitcoin ETFs saw only about a 7% outflow during the sell-off.