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Bitcoin bleeds for second straight day, nearly grazes $72,000

By A Senior Financial Correspondent Feb. 12, 2025

Bitcoin’s precipitous slide deepened on Wednesday, with the world's leading digital asset shedding more than 5% to briefly touch levels just above $72,000. The move marks a second consecutive day of heavy losses, pushing the cryptocurrency further into a correction that has wiped out more than 40% of its value since its peak last autumn.

The sell-off reflects a potent cocktail of macroeconomic anxiety, shifting monetary policy expectations, and a significant retreat by institutional investors. As the digital asset market grapples with these mounting headwinds, analysts are now closely watching the $70,000 mark as a critical psychological and technical support level.

The Numbers Tell the Story

Bitcoin’s recent price action paints a stark picture of the prevailing bearish sentiment. The cryptocurrency sank as low as $72,096.20 early Wednesday before finding tentative support. It was last trading around $72,958.38, representing a 24-hour loss of approximately 4%.

This downturn is an extension of Tuesday's plunge, which saw Bitcoin break below the $73,000 level for the first time since late 2023, hitting its lowest point in roughly 16 months. The digital currency is now trading significantly below its pre-election value and is more than 40% off its record high of about $126,000, which it reached last October.

In a note to clients on Tuesday, analysts at Citi highlighted the importance of the next major support zone. They identified $70,000 as the key level to watch, suggesting a breach could trigger a new wave of selling and signal a much deeper market downturn.

A Cascade of Headwinds

The sharp decline is not the result of a single catalyst but rather a confluence of pressures rattling investor confidence across global markets. Investors are rapidly rotating out of assets perceived as high-risk, a category that has increasingly included Bitcoin and other digital currencies.

• Geopolitical Jitters: Chief among the concerns is a broad risk-off mood fueled by rising geopolitical tensions. Strained relations between the United States and Europe over President Trump's "Greenland gambit" have injected a fresh dose of uncertainty into markets. This has been compounded by the lingering effects of a recent partial U.S. government shutdown, which delayed the release of critical economic data and has left investors flying partially blind.

• Monetary Policy Shift: Compounding the anxiety are expectations of a more hawkish U.S. Federal Reserve. President Trump's nomination of Kevin Warsh to lead the central bank late last month has been interpreted by many as a signal of a pivot towards a tighter monetary policy. A less accommodative Fed typically spells trouble for risk assets like Bitcoin, as higher interest rates make safer investments like bonds more attractive.

• Regulatory Limbo: Progress on establishing clear and comprehensive regulatory guardrails for the crypto industry in the U.S. has noticeably slowed. This lack of legislative clarity continues to be a major obstacle for broader institutional adoption, leaving large pools of capital on the sidelines and contributing to market fragility.

Institutional Investors Head for the Exits

The current sell-off appears to be heavily driven by institutional players de-risking their portfolios. According to a recent analyst note from Deutsche Bank, large-scale outflows from institutional-grade products have significantly thinned liquidity for Bitcoin, exacerbating price volatility and accelerating the downward trend.

The analysts pointed to spot Bitcoin exchange-traded funds (ETFs) as a key barometer of this sentiment. These funds, which offer regulated exposure to the digital asset, have experienced a dramatic reversal of fortune.

• ETF Outflows: The funds recorded staggering outflows of more than $3 billion in January alone. This followed substantial withdrawals of roughly $2 billion in December and about $7 billion in November.

This wave of redemptions began in the wake of a series of cascading liquidations of highly leveraged digital asset positions last October. That event appears to have been a turning point, spooking institutional holders and triggering a sustained period of profit-taking and risk reduction driven by expectations of a deeper, more prolonged Bitcoin correction.

The Crypto Contagion

As is often the case, Bitcoin's pullback is having a significant ripple effect across the broader digital asset ecosystem, hitting publicly traded crypto-related companies particularly hard.

Shares of Strategy, a software firm known for its massive Bitcoin treasury holdings, fell in lockstep with the asset it holds, dropping 5% in Wednesday's trading. The company's stock is widely seen as a proxy for Bitcoin, and its value is directly impacted by fluctuations in the cryptocurrency's price.

Meanwhile, crypto mining stocks suffered even steeper losses. Major industry players like Riot Platforms and MARA Holdings both shed nearly 11%. The profitability of these miners is directly tied to the price of Bitcoin, as a lower price reduces the value of their mined rewards and tightens their operating margins.

What to Watch Next

With the market on edge, all eyes remain fixed on the $70,000 support level. A decisive break below this line could confirm a bearish trend and open the door to further downside, potentially towards price levels not seen since the market consolidation of 2023.

Traders and investors will be closely monitoring several key developments in the coming weeks. Any pronouncements from the Federal Reserve, developments in the confirmation process for the next Fed chair, or progress on the U.S. regulatory front could serve as powerful market-moving catalysts.

For now, however, the sentiment is one of caution. The confluence of geopolitical risk, monetary uncertainty, and institutional flight has created a climate of fear, leaving the world's oldest cryptocurrency in a precarious position as it struggles to find a floor.