Bitcoin slipped below the closely watched $80,000 level over the weekend after markets digested confirmation that Kevin Warsh will become the next chair of the Federal Reserve, triggering a wave of deleveraging across crypto markets, according to analysts at QCP Asia.
Key Takeaways:
- Bitcoin broke below $80,000 after Warsh’s Fed appointment triggered broad deleveraging and $2.5 billion in liquidations.
- Risk-off sentiment spread beyond crypto, pressuring equities and precious metals as markets priced a tighter Fed path.
- Bitcoin has stabilized near $74,500, but analysts warn further downside is possible if key support fails.
In a Monday market note, QCP said bitcoin briefly fell to around $74,500 after breaking key technical support, while ether dropped below $2,170.
The sell-off sparked more than $2.5 billion in liquidations of leveraged long positions, intensifying downside pressure at a time when sentiment was already fragile due to persistent outflows from US spot Bitcoin ETFs.
Warsh Fed Pick Spurs Risk-Off Move Across Markets
Risk aversion following the Warsh announcement rippled beyond crypto. Equities weakened and traditional havens such as gold and silver extended pullbacks from recent highs, as traders reassessed the likely policy path under a Warsh-led Fed.
Markets have begun pricing a higher probability of earlier policy normalization or tighter conditions, which has weighed on non-yielding assets.
Higher margin requirements in futures markets also accelerated the unwinding of leveraged positions, according to QCP.
Bitcoin has since stabilized above the $74,500 level, an area that aligns with cycle lows seen in 2025. Options markets continue to reflect caution, with positioning still skewed toward put protection, though demand for downside hedges has moderated compared with previous stress episodes.
QCP noted that during the November slide from $107,000 to roughly $80,500, hedging activity was far more aggressive than what is currently seen near the mid-$70,000 range, suggesting some exposure has already been flushed out.
Still, analysts warned that price action remains vulnerable. Momentum indicators continue to point lower and upside appears capped near recent resistance, leaving the market exposed to further liquidation-driven moves if support gives way.
A sustained break below $74,000 could open the door to a deeper retracement toward levels last seen in 2024, while a decisive reclaim of $80,000 may help ease volatility and stabilize sentiment.
“In the current environment, attention is likely to focus on whether institutional accumulation re-emerges, particularly given Strategy’s average cost basis near 76k, alongside any de-escalation in geopolitical risks, notably around Iran,” QCP said.
“Fed communication will also be closely watched, with any remarks from Chair-designate Warsh that temper expectations of tightening potentially serving as an additional stabilizing influence,” the analyst added.
Bitcoin’s $77K Drop Sparks Debate Over Cycle Low
Bitcoin’s weekend drop to around $77,000 may mark a cycle floor, according to analyst PlanC, who said the move has the characteristics of a capitulation-style low rather than the start of a prolonged downturn.
Bitcoin briefly touched that level before stabilizing and rebounding toward $78,600, though it remains more than 11% lower on the month and roughly 38% below its October peak near $126,100.
PlanC compared the recent sell-off to past drawdowns that preceded major recoveries, including the 2018 bear market low, the March 2020 COVID crash and the sharp declines following the FTX and Terra-Luna collapses.
He estimated the current cycle bottom likely sits between $75,000 and $80,000, arguing the move could represent a final shakeout within an ongoing bull cycle.
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