Bitcoin price today trades near $68,582 after consolidating above the $67,000 support zone following last week’s crash to $60,000. The current drawdown of 54% from October’s all-time high has Bitwise CIO Matt Hougan drawing parallels to the 2018 and 2022 bear market bottoms, suggesting much of the bad news may already be priced in.
Hougan six factors contributing to the current selloff in his latest investor memo, providing the clearest institutional explanation for the market collapse.
The biggest driver is long-term investors front-running the four-year cycle. Crypto has historically moved in four-year patterns with three up years followed by a pullback. Rather than stand firm, many long-term holders decided to take gains, selling well north of $100 billion in Bitcoin last year.
The loss of attention investors to AI and precious metals has drained capital from crypto. Retail participation that once gravitated to crypto’s volatility has shifted to AI stocks and gold, which hit historic highs while Bitcoin collapsed.
The October 10 leverage liquidation event following Trump’s surprise 100% tariff on Chinese goods triggered the largest leveraged blowout in crypto history. With traditional markets closed, traders used crypto to express their displeasure, triggering cascading liquidations.
Kevin Warsh’s nomination as Fed Chair on January 30 added hawkish monetary policy fears. While Hougan believes Warsh will prove excellent, markets viewed him as the most hawkish candidate among the four options.
Rising quantum computing concerns among Bitcoin advocates including Nic Carter and Willy Woo have kept a portion of OG investors on the sidelines until concrete steps emerge from the development community.
Finally, broad macro risk-off sentiment hit all assets. Gold fell 4%, silver tumbled 20%, and tech giants like Microsoft, Palantir, and Amazon dropped significantly alongside Bitcoin.
Coinglass data shows $199.04 million in spot outflows on February 7, continuing the heavy distribution that has defined the past two weeks. The persistent selling confirms that holders are reducing exposure rather than accumulating at lower levels.
However, Hougan notes that on-chain data shows long-term holders have stopped selling aggressively and some are beginning to nibble around the edges. Open interest on derivatives exchanges has fallen to levels last seen in 2024, suggesting leverage has been substantially cleared.
On the daily chart, Bitcoin trades below all four major EMAs within a well-defined support and resistance structure. The 20 day EMA sits at $79,807, the 50 day at $85,789, the 100 day at $91,113, and the 200 day at $96,215.
The $66,948 to $67,000 zone marked in grey represents immediate support. Below that, the $54,074 to $49,050 demand zone highlighted in blue represents the next major support if current levels fail.
The current 54% drawdown from the $126,296 all-time high is significant but smaller than previous cycles. Bitcoin fell 86% in 2014, 84% in 2018, and 77% post-FTX in 2022. Hougan believes crypto is more mature now and unlikely to see a 77% drawdown again, but acknowledges it could go lower.
The trend remains bearish while price trades below all EMAs, but historical parallels and exhaustion signals suggest a bottom may be forming.
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