Bitcoin’s Wild Ride: Is $73,000 the New $100,000? 🤔💸

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In the grand theater of digital currencies, Bitcoin, that capricious star, has taken a dramatic plunge, plummeting more than -8.8% since the fateful Friday when Bybit, the once-mighty fortress of crypto, fell victim to the most audacious hack in history. Just last week, our beloved Bitcoin soared to dizzying heights of $99,493, only to retreat like a shy poet at a raucous party, now languishing around $91,500—a decline of -5.5% since the dawn of Monday. This descent not only shatters Bitcoin’s dreams of maintaining its lofty perch above $95,000 but also threatens to cast it into the abyss of a critical trading range, teetering between $91,000 and $102,000. Alas, the price has slipped beneath the descending trend channel that has loomed over it since the cold days of January 20.

What Lies Ahead for Our Digital Hero?

Ari Paul, the sage co-founder and Chief Investment Officer of BlockTower Capital, has cast his gaze upon the horizon, offering a sweeping vision of Bitcoin’s fate intertwined with the broader economic tapestry. In a post on X, he mused on the potential for continued malaise in the equity markets, which may cast a long shadow over our digital assets: “My market take: equities in for 4-15 months of pain (I’ll guess 9 months) tied to deflationary government policies (tariffs and mass layoffs mostly). Then it’s a political question – does Trump admin ‘capitulate’ and turn severely inflationary? In vast majority of similar cases in history the answer was yes, but just a low confidence guess to me currently.”

Turning his attention to the realm of crypto, Paul emphasized that while cryptocurrencies may still dance in step with equities in the short term, they are, in essence, on divergent paths: “What does that mean for crypto? I continue to think crypto and equities are on different cycles rhythms, but that doesn’t negate shorter term correlation. Alts probably follow equities down at least at first (but they’re already down so much, even versus 2021 prices, they may bottom well before equities.)”

On the subject of Bitcoin, Paul predicts that our leading cryptocurrency will “act like a blend of gold and S&P 500,” adding, “if gold remains strong, then that would suggest Bitcoin would outperform losing equities, but maybe not by much. A retrace to ~$73k-$77k seems plausible, I’d probably add there.”

Despite the tempestuous seas ahead, Paul remains a beacon of optimism: “I remain confident crypto bull market not over, but this is looking increasingly different from prior cycles, maybe substantially slower and longer. My base case is that crypto will lead the general macro inflation turn, so maybe crypto bull run resumes in 6 months and equities turn up in 9. The dates given are just indications of my guesstimates. I place no weight on the exact timeframes.”

Meanwhile, BitMEX founder Arthur Hayes has also taken to X, sounding the alarm of an impending downward spiral. He pointed to the intricate mechanics of Bitcoin Exchange-Traded Funds (ETFs) and futures market arbitrage as potential catalysts for increased selling pressure.

“Bitcoin goblin town incoming: Lots of IBIT holders are hedge funds that went long ETF short CME future to earn a yield greater than where they fund, short term US treasuries. If that basis drops as BTC falls, then these funds will sell IBIT and buy back CME futures. These funds are in profit, and given basis is close to UST yields they will unwind during US hours and realise their profit. $70,000 I see you mofo,” he writes, with a wink and a nudge.

Notably, the research firm 10x Research published an analysis on Monday, revealing that while Bitcoin ETFs—led by BlackRock’s IBIT product—have attracted a staggering $38.6 billion in net inflows since their January 2024 launch, much of this capital may not represent straightforward bets on rising BTC prices, aligning with Hayes’ statement.

“Although Bitcoin ETFs have attracted $38.6 billion in net inflows since their January 2024 launch, our analysis suggests that only $17.5 billion (44%) represents genuine long-only buying. The majority—56%—is likely tied to arbitrage strategies, where short Bitcoin futures positions offset inflows,” the firm noted, with a hint of irony.

Before the current price drop, market technician Tony “The Bull” Severino warned

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2025-02-25 11:47