Bitcoin plunges: Where will the price bottom out?

$1.7 Billion Gone Up in Smoke: Bulls Capitulate

Volatility has returned with unprecedented violence. Bitcoin (BTC) has suffered a brutal correction, plunging to the $81,000 zone, a level that hadn’t been tested in nine months. At the time of writing, the price is attempting a timid recovery around $82,000 – $82,800, but selling pressure remains overwhelming. This bearish move, fueled by fears linked to tech earnings, the third world war in Iran, and tariff threats, has caught overexposed investors off guard.

It’s a genuine bloodbath for leveraged traders. Within 24 hours, the market has recorded over $1.7 billion in liquidations, the vast majority of which involved long (buy) positions. This massive long squeeze has exacerbated the drop, creating a snowball effect typical of violent corrections.

On-chain data confirms that panic has spread well beyond Bitcoin, affecting all altcoins. Exchanges have seen their order books wiped clean, forcing weak hands to sell at a loss. This market “reset,” while painful, could clean up the open interest which had reached unsustainable levels.

Bitcoin on a Knife’s Edge: Key Levels to Watch

From a technical standpoint, the situation is critical but not hopeless. The $81,000 – $82,000 level is currently acting as a major support. If the bears manage to break through this barrier, the door would be open to much lower zones, potentially around $77,500, or even $63,000 in a catastrophic long-term trend break scenario.

Conversely, to hope for a bullish reversal, Bitcoin must imperatively reclaim the $87,000 resistance in the short term. Indicators like the RSI are in oversold territory, which suggests that a technical bounce (dead cat bounce) is possible, but caution remains warranted as long as volatility doesn’t stabilize.

Market sentiment has turned to extreme fear. Historically, the month of February is positive for Bitcoin. Nevertheless, the current context means that the risk is still far too high without confirmation and a weekly close above $87,000.

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