Bitcoin Faces Macro Tests After Steep Declines; Relief Rally at Key Levels

Bitcoin Extends Slide Before Relief Rally as Risk-Off Pressures Build

Bitcoin’s price action remained turbulent through the weekend and into early trading on February 7, with the leading cryptocurrency sharply lower at the start of the week before staging a partial rebound. BTC slumped as low as the mid-$60,000s, probing levels near $60,000 for the first time in over a year, before recapturing support above $70,000 late Friday. Despite the bounce, Bitcoin’s overall trend for the week showed a significant drawdown, marking one of the weakest multi-day performances since late 2022.

The initial downturn coincided with broad risk-off behavior across financial markets, where technology stocks led sell-offs and traditional safe-haven assets like gold and silver registered gains. Elevated U.S. Treasury yields and firm dollar strength have continued to weigh on speculative assets, intensifying pressure on risk-linked instruments including Bitcoin.

Crypto Market Reaction: Altcoins and ETF Flows

The broader crypto market mirrored Bitcoin’s weakness earlier in the session, with major altcoins such as Ethereum, Solana, and XRP lagging deeper into negative territory as risk sentiment deteriorated. While Ethereum, like Bitcoin, recovered some ground alongside the weekend rally, smaller and more speculative tokens underperformed, reinforcing a risk-off disposition among traders.

Data from digital asset exchange-traded products showed notable outflows, particularly in U.S. spot Bitcoin ETFs, which have shifted from net accumulation to net selling year-on-year. This reversal in ETF demand added to market headwinds and underscored thinning institutional interest amid volatility.

Macro Drivers and Investor Sentiment

Market participants have pointed to a confluence of macroeconomic and policy factors behind Bitcoin’s recent volatility. Elevated U.S. Treasury yields have dampened demand for higher-beta assets, while a stronger U.S. dollar has lifted the opportunity cost of holding non-yielding digital assets. These developments have been accompanied by weaker sentiment toward equities, particularly software and tech sectors, that traditionally share risk appetite dynamics with crypto.

Analysts also highlight a divergence between Bitcoin and traditional hedges such as gold, which benefited from macro stress in 2025. Bitcoin’s movement opposite to gold has challenged narratives that position it as a reliable hedge during inflationary or geopolitical stress environments, further dampening investor confidence in its macro role.

Add to this ongoing regulatory uncertainty in the United States, where bipartisan progress on digital asset clarity legislation has stalled. The absence of clear regulatory guidance on stablecoins and exchange frameworks has clouded institutional participation decisions, leaving many investors to recalibrate risk exposures.

Immediate Triggers and Technical Stress

The weak price action in Bitcoin earlier last week triggered a cascade of liquidations in leveraged futures markets, exacerbating the downward trajectory. These mechanical sell-offs intensified as BTC broke below key short-term support bands, with margin calls forcing additional selling at critical junctures. Technical indicators, including distortions in open interest and spent-output profit ratios moving toward neutral, suggest a market structure still digesting prior gains rather than establishing a robust floor.

Despite Friday’s rebound, key technical resistances remain clustered above current levels, with resistance bands formed by moving averages and previous swing highs likely to cap near-term upside. Analysts widely note that a sustained recovery would require BTC to reconquer levels above $73,000-$75,000 on strong volume, a scenario contingent on improving macro conditions.

Analyst Interpretation: Sentiment Remains Fragile

Investor sentiment across crypto markets has tilted toward risk aversion, reflected in sentiment indices showing elevated fear readings and widening bid-ask spreads. Strategists remark that Bitcoin’s price behavior this year has eroded confidence among both retail and institutional cohorts. Some long holders have raised exposure cautious of deeper retracements, while others await clearer macro cues before reentering positions.

One noteworthy aspect of the recent price environment is Bitcoin’s decoupling from certain traditional asset correlations. While Bitcoin historically exhibited moderate alignment with tech equities or yield-sensitive assets, its current pattern shows diminished correlation with gold and inconsistent moves with broader stock indices. This shift has forced a reassessment among portfolio allocators about Bitcoin’s role in multi-asset strategies.

Near-Term Outlook: Scenarios and Risk Factors

Looking ahead, price action in Bitcoin will likely remain vulnerable to macroeconomic data releases, particularly U.S. inflation figures and monetary policy guidance from the Federal Reserve. Softer inflation or hints of future rate cuts could buoy risk appetite and diminish headwinds, offering BTC a path to retest higher levels. Conversely, stronger than expected macro prints or renewed equity weakness could intensify outflows from risk assets and keep Bitcoin under pressure.

Support levels near the low $60,000s and key psychological thresholds around $60,000-$65,000 will be watched closely by market technicians. A break below these zones could expose BTC to deeper corrective phases, while stabilization above $70,000 would signal potential relief and invite short-term traders back into the marketplace.

Regulatory developments and ETF flow dynamics will also be critical to sentiment. A clear legislative outcome on digital asset regulation could restore some confidence, whereas further delay in policy clarity is likely to weigh on institutional allocations in the near term.

In summary, Bitcoin’s recent price volatility reflects an interplay of macro pressures, risk-off positioning, and structural market dynamics. While a partial rebound offers some relief, the path to sustained recovery remains tied to broader financial conditions and investor sentiment over the coming days and weeks.