Key Points
- Investor sentiment for Bitcoin [BTC] sank to a three-year low due to fears of inflation and international tariffs.
- Analysts are divided on the future direction of BTC’s price, with some suggesting further declines and others predicting a bounce back.
On February 26, Bitcoin [BTC] recorded a significant loss, pushing investor sentiment below levels seen after the FTX collapse.
The crypto fear and greed index reached a three-year low of 10, indicating a state of ‘extreme fear’. This is worse than the 22 recorded during the FTX implosion in 2022.
Market Reaction and Predictions
The market reacted with caution to the negative sentiment, with investors withdrawing $1B from BTC ETFs on Wednesday. This resulted in weekly outflows of $1.8B, according to Bloomberg ETF analyst Eric Balchunas.
The market’s reaction was further influenced by President Trump’s announcement of a 25% tariff on the European Union, heightening inflation fears.
Analysts warn that such tariffs could increase inflation and the price of goods. On Tuesday, BTC fell below $90K following President Trump’s declaration of a 25% tariff on Canada and Mexico, effective March 3rd.
However, some analysts, like Ken Teng (Chicken Genius), see the ‘extreme fear’ in the market as a sign of a potential bottom. They believe BTC could bounce higher as it is still far from topping out.
Future Predictions
BTC trader Cryp Nuevo speculated that BTC could dip to the confluence area of the CME gap and weekly moving average at $77K-$78K. These are price imbalances that tend to be filled sooner or later.
At the time of writing, BTC had bounced 5% from the $82.2K lows and was valued at $86.5K. It remains uncertain whether the king coin will reclaim range-lows above $90K and reverse recent losses or dig deeper to $77K.