Bitcoin (BTC) Crashes to $82,300, Losing 15% in a Week Amid a $500 Million Market Wipeout.

NVIDIA's Q4 revenue surged to $39.3 billion, up 78% year-over-year, fueling AI stock demand.

Crypto markets are still in deep red, with over $500 billion wiped out in just a week as the market cap plunges to $2.8 trillion. Bitcoin, the leading cryptocurrency, has crashed to a 4-month low of $82,300, dropping nearly 15% in a week. The sudden crash has triggered massive liquidations, wiping out $770 billion in the last 24 hours.

However, the Crypto Fear & Greed Index has dropped to 20, showing extreme fear in the market. So, what’s behind Bitcoin’s price drop?

One of the main reasons for Bitcoin’s decline is the surge in AI stocks, especially NVIDIA. The chipmaker reported an impressive $39.3 billion revenue in Q4, showing a 12% increase from the previous quarter and a massive 78% rise year-over-year.

This strong performance caused NVIDIA’s stock to rally by 4%, adding over $125 billion to its market cap. As investors rushed to invest in high-growth AI stocks, Bitcoin lost momentum, showcasing a shift in investor confidence from digital assets to AI-related investments.

Another major factor affecting Bitcoin’s price is the ongoing outflow from Bitcoin exchange-traded funds (ETFs). According to data from Farside, Bitcoin ETFs recorded outflows of $2.43 billion between February 24 and February 26.

This marks seven consecutive trading sessions of outflows, showing no signs of stopping. Leading the outflows are major financial institutions like Fidelity, which has increased selling pressure in the market.

Bitcoin is also facing additional pressure due to the upcoming expiration of $5 billion worth of options contracts on February 28. A significant portion of these contracts are set at higher strike prices, making them likely to expire without profit.

Data from Deribit suggests that around 78% of these expiring options, worth $3.9 billion, will not be profitable. Meanwhile, $1.3 billion in Bitcoin has been moved to exchanges, which could lead to more selling.

As of now, Bitcoin is trading at around $85,534, reflecting a 4% drop in the past 24 hours. The key support level to watch is $83,000, as losing this level could push Bitcoin further down to $80,313. On the other hand, if Bitcoin manages to hold this support, it could see a recovery.

The Relative Strength Index (RSI) has fallen to 25.92, indicating extreme oversold. Historically, when the RSI drops below 30, Bitcoin tends to see a short-term price bounce. However, it’s important to note that RSI provides better signals in short-term trends.

Overall, Bitcoin’s price movements are influenced by a combination of macroeconomic factors, technical indicators, and market sentiment. As investors navigate this dynamic landscape, they are making shifts in their portfolio preferences, which are evident in the recent market trends.