Bitcoin's Plunge Below $70,000 Sparks Alarm: Is This the Start of a Bear Market?
Bitcoin took a nosedive to $70,000 on Thursday, sending shockwaves through the crypto community. But this isn't just a routine dip—on-chain data and market trends suggest a deeper, more structural weakness is at play. And this is the part most people miss: it's not just about price; it's about shrinking buyer interest and tightening liquidity, according to CryptoQuant's latest report. Their Bull Score Index has plummeted to zero, a stark indicator that the market isn't just digesting gains—it's losing steam.
Glassnode data backs this up, showing weak trading volumes and a growing demand vacuum. Interestingly, the decline isn't driven by panic selling but rather by reduced market participation. At the time of writing, Bitcoin was trading at $70,766, down 7.38% in the last 24 hours. But here's where it gets controversial: could this be the beginning of a prolonged bear market, or just a temporary setback? Let us know what you think in the comments!
Institutional Shift and US Demand Reversal
Institutional flows have taken a sharp turn compared to last year. US spot Bitcoin ETFs, once net accumulators, are now net sellers. This reversal has created a massive year-on-year demand gap, measured in tens of thousands of Bitcoin. Market indicators tied to US investor behavior also reflect softer demand, breaking from the historical trend where strong US demand fueled bull markets.
Liquidity Concerns Add to the Gloom
Stablecoin expansion, typically a sign of trading activity and risk appetite, has stalled. For the first time since 2023, the market capitalization of USDT has turned negative, according to CryptoQuant. Longer-term demand growth has also plummeted from last year's highs, pointing to fading participation rather than just unwound leveraged positions. Technically, Bitcoin remains below its 365-day moving average, with on-chain valuation models suggesting major support between $70,000 and $60,000.
Macro Uncertainty and Policy Shifts
Bitcoin's price action is increasingly mirroring high-beta tech stocks rather than acting as a safe-haven asset. Prediction markets show traders expect little change from the Federal Reserve in April, with only modest hopes for a rate cut in June. This limits near-term liquidity relief. Adding to the uncertainty, political developments—like President Trump's recent comments on Federal Reserve nominee Kevin Warsh—have tempered optimism about central bank independence.
Market Volatility Persists
Price movements during US trading sessions highlight persistent weakness. Bitcoin dipped to levels not seen since late 2024, slipping below prior support levels before attempting short-lived rebounds. Macro assets broadly lost momentum, with gold failing to hold above $5,000 and US equities opening lower. QCP Capital noted ongoing macro uncertainty, stating, “Crypto remains volatile.” They added, “The shutdown overhang has faded, but fiscal standoffs could return quickly. Homeland Security funding is only extended through Feb. 13, keeping deadline risks in play.”
Meanwhile, trader CJ warned of potential further declines of roughly $10,000, though relief rallies could occur first. Analysts also pointed to Bitcoin's 200-week exponential moving average near $68,000 as a potential safety net, as total 24-hour crypto liquidations surpassed $800 million, underscoring elevated volatility.
Thought-Provoking Question: With institutional demand waning, liquidity tightening, and macro uncertainty looming, is Bitcoin losing its luster as a long-term investment? Share your thoughts below—we want to hear from you!
