The cryptocurrency market has hit an exceptionally rough patch in recent trading with, for example, Bitcoin (BTC) collapsing $10,000 in just two days to its press time price of $85,811 — its lowest level since the Trump re-election rally started in early November.
Given the sheer volume of selling that led to such a sharp decline, it should come as no surprise that financial institutions operating spot BTC exchange-traded funds (ETFs) have been offloading the cryptocurrency at a record pace, with February 25 alone seeing nearly $940 million in outflows.
Is Bitcoin poised to rally after the massive selloff?
The biggest seller by far on the day proved to be Fidelity Wise Origin Bitcoin Fund (FBTC), as it sold more than 3,770 BTC worth almost $345 million. Even VanEck Bitcoin (HODL), the smallest seller by volume on February 25, proved unfaithful to its ticker as it let go of 109,000 Bitcoins worth $10 million.
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Despite the massive offloading, some investors quickly turned hopeful that the extensive pressure would swiftly send BTC into ‘oversold’ territory, leading to a rebound. Indeed, trading of February 25 appeared briefly to have fulfilled such hopes as the coin whipsawed after falling below $88,000.
The world’s premier cryptocurrency once again gave hope that the bloodbath that wiped more than $300 billion from the digital assets’ total market capitalization was at end as it reclaimed $89,000 earlier on February 26 but, so far, to no avail.
Indeed, though some investors, such as Cas Abbé on X, pointed out that BTC was relatively quick to find a local bottom after major ETF selloffs, history shows that isn’t necessarily the case.
For example, a protracted period of outflows in late April 2024 had Bitcoin first fall to approximately $63,000, only to collapse below $60,000 by early May. Similarly, a mid-June selloff first took the cryptocurrency from $72,000 to $65,000 and then even lower to $55,000 after a brief rebound.
A similar occurrence could be observed in late August as Wall Street was selling extensively as BTC was falling toward $59,000 only to, once again, briefly recover before collapsing toward $53,000.
Why Bitcoin could trade lower for months
Despite the dire situation in the cryptocurrency market on February 26, some silver lining may remain for the more bullish investors.
As Finbold reported on Tuesday, it is highly unlikely that Bitcoin will plunge below $83,000 during the current downturn, as there is a strong indication it remains in global consolidation in the weekly and daily timeframes.
Still, both historical examples — during the summer of 2024, BTC suffered from a protracted and moderately bearish setup as it remained fixed in the rough range between $63,000 and $67,000 before finally taking off months later upon Donald Trump’s election victory — and technical analysis hint that the coin might struggle with regaining bullish momentum.
At press time, Bitcoin remains significantly below the $89,400 to $90,000 that could enable it to reverse course.
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