Analyst Cites Three Key Factors Behind Bitcoin’s Bear Market as Price Drops Below $75,000

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A chill reminiscent of a crypto winter is being felt by many traders this February. Bitcoin fell below $75,000 on Sunday, continuing a series of declines that have impacted the original cryptocurrency since last autumn. Although Bitcoin staged a modest recovery on Monday, rising back toward $80,000 by mid-afternoon, this still represents a 37% drop from its October peak, as reported by Binance.

The cryptocurrency downturn is partly driven by recent macroeconomic developments. According to one analyst, the causes include weak tech sector earnings, falling prices for gold and silver, and the nomination of Kevin Warsh for Federal Reserve chair.

“Bitcoin’s breakdown stems from a confluence of three factors that took markets days to digest: disappointing Magnificent Seven earnings that cracked the AI narrative, a violent precious metals unwind, and uncertainty around Kevin Warsh’s Fed chair nomination,” stated Jasper de Maere, a desk strategist at Wintermute.

Investors are also concerned about the stalled progress of a major cryptocurrency bill as they reduce their exposure. The Clarity Act, intended to set market structure rules for crypto trading, has encountered obstacles on its way to receiving a presidential signature. In January, a CEO criticized the bill because it banned customers from earning yield on stablecoins. This has further destabilized the bill’s prospects.

Precious metals have experienced significant price volatility as investors move away from the dollar. Last week, gold and silver hit record highs, only to subsequently fall by 11% and 32%, respectively.

Other major cryptocurrencies are also struggling. Ethereum has fallen approximately 24% over the past month to around $2,354, and another cryptocurrency has dropped about 20% to a price near $105, according to Binance data.

Downturns are familiar territory for the crypto market. The last major crypto winter occurred in 2022 and 2023, marked by the collapses of Terraform Labs and FTX under the leadership of disgraced figures Do Kwon and Sam Bankman-Fried. The current decline, however, is not linked to a major scandal. Instead, investors are avoiding risky assets amid broader economic uncertainty.

“Crypto’s been in a bear market longer than most appreciate, but this is organic deleveraging rather than structural crisis,” de Maere added.