Bitcoin (BTC) Has Dropped Below $80,000, Marking a 14% Drop in a Week

Bitcoin has dropped below $80000, marking a 14% drop in a week. The leading cryptocurrency is currently trading at $77800

Bitcoin (BTC) has dropped below $80,000, marking a 14% drop in a week amid rising market uncertainty and sentiment hitting levels last seen during the 2022 bear market.

The leading cryptocurrency is currently trading at $77,800, while Ethereum (ETH) has fallen to $1,860 – it’s lowest since November 2023.

This downturn comes as institutional investors pulled a fourth consecutive week of digital assets, with the week ending March 7 recording $876 million in outflows from digital asset investment products.

Over the past four hours, liquidations have exceeded $195 million, with long positions amounting to $161 million.

This downturn follows a period of strong inflows, which began in December 2023 after the market turmoil sparked by FTX. However, despite these outflows, year-to-date totals remain in positive territory.

After a record-breaking 2023, which saw $2.5 billion in capital additions, digital asset investment products saw outflows for the fourth straight week.

From January 1 to March 7, institutional investors pulled a net $4.75 billion from digital asset investment products.

This brings the four-week total to $4.75 billion, slashing year-to-date inflows to just $2.6 billion. Bitcoin (BTC) bore the brunt of these outflows, losing $756 million.

Moreover, the sell-off suggests traders were caught off guard, leading to forced liquidations and accelerating Bitcoin’s decline.

After reaching a peak of $181 billion in mid-February, total assets under management across digital funds have now dropped by $39 billion. It’s now sitting at $142 billion—the lowest since mid-November 24.

Insiders believe that US policy moves have intensified selling pressure. President Trump’s new tariffs on Canada, Mexico, China, and potentially the EU have driven institutional investors away from risk assets like crypto.

“The moves in crypto and stocks are becoming increasingly one-sided. Red days are DEEP red days and vice-versa, yet another sign of changing risk appetite. Sentiment is the ultimate driver of price,” wrote the Kobeissi Letter.

Additionally, Trump’s remarks at Friday’s White House Crypto Summit triggered further uncertainty. He confirmed plans for a US Bitcoin Reserve, where the government will use seized BTC but will not make additional purchases. This dampened market confidence, leading to further sell-offs.

Crypto Fear & Greed Index plunges to 17 amid Bitcoin downturn

The Crypto Fear & Greed Index, which measures the overall sentiment in the cryptocurrency market, has dropped to 17, signaling extreme fear among investors.

This index, created by web3 derivatives platform TokenPulse, takes into account various market indicators, such as volatility, trading volume, social media engagement, and online searches, to gauge the level of fear or greed.

During periods of high market volatility or uncertainty, investors tend to become overly cautious and fearful, leading to a decline in the Fear & Greed Index. Conversely, when markets are calm and there is a lack of news or events to drive fear, the index rises, indicating greed.

In 2024, the Crypto Fear & Greed Index soared to 92+ as investors were optimistic about the cryptocurrency market. However, the index has since plummeged, reflecting a broad market correction fueled by significant capital outflows from digital assets.

Earlier this week, data from digital assets research firm Chainalysis revealed that institutional investors pulled funds from crypto for the third straight week.

The shift in sentiment comes amid a broader market downturn, with rising inflation and interest rates putting pressure on risk assets.

As the crypto market continues to adjust to this new reality, the coming weeks will be crucial in determining whether further sell-off activity is on the horizon.