Bitcoin fell below $80,000 over the weekend after confirmation that Kevin Warsh will become the next chair of the U.S. Federal Reserve, triggering a sharp risk-off move across crypto markets.
The drop led to heavy deleveraging, with about $2.5 billion worth of leveraged long positions liquidated, according to analysts at QCP Asia. The sell-off pushed bitcoin through key technical support levels before prices stabilized near a mid-cycle support zone.
In a Monday market note, QCP Asia said bitcoin briefly touched levels associated with earlier cycle lows, while ether and other major cryptocurrencies also declined. The pressure was amplified by continued outflows from U.S. spot bitcoin exchange-traded funds.
Risk aversion extended beyond crypto. Global equities weakened, while traditional safe-haven assets such as gold and silver pulled back from recent highs. Markets are increasingly pricing in the possibility of tighter monetary policy under a Warsh-led Federal Reserve, QCP Asia said.
Bitcoin has since steadied above the mid-cycle support area. However, options markets remain cautious, with positioning still tilted toward downside protection. While demand for hedges has eased compared with earlier sell-offs, analysts warned momentum remains weak.
QCP Asia said the market remains vulnerable if current support fails. A sustained break lower could trigger another wave of liquidations, while a move back above recent resistance may help calm volatility and improve sentiment.
Analyst PlanC described the weekend drop as a possible capitulation-style low. He argued the $75,000 to $80,000 range could mark a cycle bottom, similar to sharp sell-offs seen before past recoveries.
PlanC compared the move to previous major drawdowns, including the 2018 bear market low, the March 2020 crash, and declines following the Terra-Luna and FTX collapses. He said the current pullback may represent a final shakeout within an ongoing bull cycle.
