The current Bitcoin (BTC) correction could last until March or April before attempting to rally toward previous highs, according to Matrixport analysis.
Bitcoin fell below $80,000 on Feb. 27 for the first time in a week amid a broader market sell-off driven by escalating global trade tensions.
Three major US stock market indexes also suffered losses, with the Nasdaq 100 dropping 7.05% over the past five days, while the S&P 500 and the Dow Jones Industrial Average fell 1.33% each.
“Analyzing macroeconomic trends and central bank policies gives us a clear edge in forecasting Bitcoin’s price trajectory,” Matrixport wrote in its Feb. 28 research report.
“This type of analysis is only becoming more crucial, especially as Wall Street investors—who track these macro factors daily—are now actively participating in Bitcoin trading.”
Related: Bitcoin needs ‘to find real organic buyers’ to resume uptrend — VC
US dollar strengthens as traders seek refuge
The winner in the week’s financial turmoil has been the US dollar, which has been strengthening.
“A stronger US dollar causes this liquidity measure to decline, which suggests downward pressure on Bitcoin prices. Global liquidity peaking in late December 2024—driven by a surging US dollar—provides a clear explanation for Bitcoin’s ongoing correction,” Matrixport said in its report.
The US dollar index (DXY) surged for a third straight day, nearing 107.40, as traders sought refuge in the greenback amid a market sell-off. The boost came after Donald Trump reaffirmed tariff hikes, imposing a 25% tariff on imports from Canada and Mexico and an additional 10% on Chinese goods, effective March 4.
Related: Bitcoin needs ‘key’ $75k support to avoid price drop amid macro concerns
Traditional market movements have become increasingly important for cryptocurrency traders, partly due to the success of Bitcoin ETFs in the U.S., which have seen $39 billion in inflows since their launch in January 2024.
However, 56% of these inflows are likely tied to arbitrage strategies, while the remainder of Bitcoin ETF purchases have been for long-term investments, according to 10x Research’s Markus Thielen.
Bitcoin bulls are still on the lose
Some Bitcoin traders thrive on the concept of “buy the dip,” which refers to accumulating Bitcoin when prices correct, much like purchasing a product at a discount.
Santiment’s social sentiment tracker found that mentions of “buying the dip” have surged to their highest level since July 2024.
Charles Edwards, founder of digital asset fund Capriole Investment, told Cointelegraph in an earlier interview that the significant fear level and liquidations may indicate the market is near a short-term bottom.
Meanwhile, CryptoQuant CEO Ki Young Ju stated that the bull cycle is not over but added that he’d be wrong if Bitcoin drops further below $75,000.
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