Bitcoin [BTC] The price fell to the $70,000 zone for the first time since November 2024, marking a 14-month low amid a growing correlation with US tech weakness.
As a touted “open source software,” Bitcoin’s extended correction alongside the iShares Expanded Tech-Software ETF (blue line) wasn’t all that surprising. noted Matthew Siggel, head of digital assets research at VanEck.
Source: Google Finance
The software ETF decreased around 1.8% on February 4, while the broader tech-heavy Nasdaq also fell 1.5%, sending BTC down almost 3%.
Additionally, US Spot BTC ETFs traded $544 million in Daily Outflow on February 4, further accelerating the bleeding mid-week.
Potential Catalysts for Bitcoin Price Recovery
In turn, digital asset manager Grayscale viewed BTC’s ongoing sell-off as driven by the CLARITY Act’s sluggish momentum and quantum scare.
Ethereum [ETH]Solana [SOL]and others have rolled out a post-quantum roadmap.
But Bitcoin’s divided community could exacerbate the problem, amid growing fears that quantum breakthroughs could make blockchains vulnerable. Grayscale noted,
“It is natural for investors to want to understand quantum risk before allocating capital. The increased debate over quantum risk may hold back some capital allocation decisions in the near term.”
However, in the medium to long term, the asset manager remained optimistic.
“In our view, crypto will see net new capital inflows as uncertainty surrounding US legislation and quantum readiness decreases.”
In fact, Nansen analysts also shared a similar projection with AMBCrypto, noticing that progress in the CLARITY Act could help stabilize the current correction.
Short-term BTC price pressure is increasing
That said, Bitcoin’s near-term outlook did not appear encouraging to bulls.
According to Deribit, the options flow and increased Put Skew (increased hedging and demand for downside protection) indicated a prolonged correction. The company declared,
“BTC Option flows suggest the downside play is not over yet. Unwinding of protection/bear plays and new downside action, combined with steep Put Skew and firm IV are a manifestation of the unknown depth of D1 selling.”
Source: Deribit/Amberdata
At the time Deribit published the above analysis, BTC was trading around $76,000. The crypto asset has since hit a new yearly low of $70.1K, before rising slightly to $71.8K at the time of writing.
The chart showed an increase in Put purchases around the $70,000, $65,000, and $60,000 strike prices, indicating that some players expected BTC to fall below $70,000.
However, for Bitfinex, a potential recovery or consolidation around current levels was likely. The crypto exchange cited aggressive accumulation of whales during the dip, which could help consolidate losses.
Source: MacroMicro/Bitfinex
Final thoughts
- BTC fell to $70,000 amid rising US tech weakness, and as a high-beta tech asset, it got caught in the market crisis.
- While bearish pressure could continue in the short term, whales were bidding aggressively at current levels.