Bitcoin [BTC] price slipped to $70K zone for the first time since November 2024, marking a 14-month low amid an increasingly strong correlation with U.S. tech weakness.
As a touted ‘open-source software’, Bitcoin’s extended correction alongside the iShares Expanded Tech-Software ETF (blue line) was not so surprising, noted Matthew Siggel, VanEck’s head of digital assets research.
The software ETF dropped about 1.8% on the 4th of February, while the broader tech-heavy Nasdaq also slipped 1.5%, dragging BTC lower by nearly 3%.
Additionally, U.S. Spot BTC ETFs saw $544 million in Daily Outflows on the 4th of February, further accelerating the mid-week bleedout.
Potential catalysts for Bitcoin price recovery
For its part, digital asset manager Grayscale viewed the ongoing BTC sell-off as driven by the CLARITY Act’s slow momentum and quantum fears.
Ethereum [ETH], Solana [SOL], and others have rolled out a post-quantum roadmap.
But Bitcoin’s divided community may compound the problem amid rising fears that the quantum breakthroughs may make blockchains vulnerable. Grayscale noted,
“It’s natural for investors to want to understand quantum risk before allocating capital. The heightened debate about quantum risk may be holding back some capital allocation decisions over the short term”
However, the asset manager remained bullish in the medium to long-term.
“In our view, crypto will see net new capital inflows when uncertainty about U.S. legislation and quantum readiness abates.”
In fact, Nansen analysts also shared a similar projection with AMBCrypto, noting that progress in the CLARITY Act could help stabilize the current correction.
BTC price short-term pressure deepens
That said, Bitcoin’s near-term outlook didn’t look hopeful for bulls.
According to Deribit, Options flow and elevated Put Skew (increased hedging and demand for downside protection) signalled an extended correction. The firm stated,
“BTC Option flows suggesting downside plays not over. Rolling down of protection/bear plays and fresh downside action, combined with steep Put Skew and firm IV are a manifestation of the unknown depth of D1 selling.”
At the time Deribit released the analysis above, BTC traded around $76K. The crypto asset has since made a new yearly low of $70.1K before slightly climbing to $71.8K at press time.
The chart showed increased Put buying around the $70K, $65K, and $60K strike prices, suggesting some players expected BTC to drop below $70K.
For Bitfinex, however, a potential rebound or consolidation around current levels was likely. The crypto exchange cited aggressive whale accumulation during the dip, which could help consolidate losses.
Final Thoughts
- BTC slipped to $70K amid deepening U.S tech weakness, and as a high-beta tech asset, it was caught in the market rout.
- While near-term bearish pressure could persist, whales were aggressively bidding at current levels.
