US President Donald Trump’s surprise nomination of former Fed governor Kevin Warsh as the next chairman of the Federal Reserve boosted the dollar, ending the precious metals rally and bringing bitcoin below a key support level.
Onchain data shared by Glassnode shows that bitcoin consolidated just above key structural support around $83.4K, the lower bound of its short-term holder cost model.
A break below this zone could open the door to a deeper slide towards $80.7K, the so-called True Market Mean.
That breakdown happens. Over the past 7-day period bitcoin lost more than 9.2% of its value and is now trading at $81,200.
The broader market, as measured by the CoinDesk 20 (CD20) index, lost 12.4% of its value during that period. This has meant that the Crypto Fear & Greed Index dropped to “extreme fear” during the week.
Glassnode’s report notes that short-term holder supply held at a loss with BTC above this level remained at 19.5%, well below the capitulation threshold of 55%, suggesting some resilience despite downward pressure. However, the buyer’s judgment is tested as the price falls.
On the derivatives side, funding rates remain subdued, pointing to cautious speculative appetite. Options markets are pricing in a greater demand for downside protection, with dealer gamma turning negative below $90K. This increases the risk of volatility spikes if support breaks.
Taken together, the data paint a picture of a fragile but not yet broken market. Liquidity remains the most important variable.
The crypto market may be gripped by fear at the moment, but that could be a good sign.
According to crypto analysis platform Santiment, sentiment across various cryptocurrency communities has fallen to extreme lows, levels that have historically preceded price recoveries.
In a report, Santiment highlighted the rise in bearish comments on social media as a rare bright spot in an otherwise downbeat environment.
“While network fundamentals are stagnant, audience sentiment has hit extreme levels of negativity,” the firm wrote. “Historically, this excessive bearishness is a strong contrarian indicator that a local bottom could be near.”
While prices have fallen over the past few months, long-term bitcoin holders are selling at the fastest pace since August. Crypto prices fell during the week, apparently because the decline of the US dollar reversed.
Some industry observers say the current mood may be short-lived.
Bitwise’s CIO Matt Hougan had recently joined CoinDesk’s Markets Outlook where he said that crypto is in the late stages of a bear market bottom. Historically, crypto markets have tended to move in the opposite direction of the crowd, the report points out.
