Bitcoin got off to a rough start in February as negative sentiment persisted and market liquidity weakened. However, the latest data suggests that selling pressure is gradually easing, while early signs of recovery are emerging.
These signs are not yet strong enough to confirm a reversal, but they remain some of the few positive signals in this phase.
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3 Reasons Bitcoin Could Soon Recover From Below $80,000
A recent report from BeInCrypto noted that crypto funds saw $1.7 billion in outflows last week. This reversed year-to-date inflows into net losses.
Still, early indicators suggest that selling pressure may be fading. This is evident in the Coinbase Premium Index, which measures the price difference between Bitcoin on Coinbase and other exchanges.
Coinbase Bitcoin Premium Index. Source: CoinglassThe Coinbase Bitcoin Premium is recovering, even though it remains negative. This is an early signal that buying demand from the United States via Coinbase is slowly returning. Historically, this often points to a reversal once the premium moves from negative to positive.
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Another signal that has been interpreted pessimistically is that Bitcoin is currently trading below the average cost basis of all US Bitcoin ETF funds. CryptoQuant data places this level at around $79,000.
Bitcoin US ETF Realized Price. Source: CryptoQuant.However, historical trends since the approval of US Bitcoin ETFs show that Bitcoin rarely stays below this cost level for long.
History suggests that this zone often acts as demand support before a strong rebound. Institutional investors and long-term holders typically have little incentive to sell at a loss below their cost basis.
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The chart shows that during the most bearish phase in Q3 2024, Bitcoin tested this level multiple times. Each time, the price recovered within one to two weeks.
While many analysts continue to highlight negative signals, Swissblock — a Switzerland-based crypto analytics and investment firm — noted a positive convergence between network growth and liquidity that emerged in early February.
Bitcoin Network Growth vs Liquidity. Source: SwissblockSponsored
Swissblock noted that the last time network growth and liquidity recovered together from low levels was in 2021, just before Bitcoin reached a new all-time high. This suggests that another recovery phase could be approaching.
Overall, these signs suggest that Bitcoin may not remain below $80,000 for long and could soon climb back above this level.
However, not all outlooks are optimistic. Alex Thorn, Head of Research at Galaxy Digital, warned that Bitcoin’s recent weakness could persist. The price could even fall further toward the 200-week moving average, near $58,000, in the coming weeks or months. The main drivers include declining liquidity and the lack of positive short-term catalysts.
These differing perspectives provide a broader view of the forces shaping the market. They may also help traders reduce risk while attempting to capture potential opportunities.
Source: https://beincrypto.com/why-bitcoin-may-not-stay-below-80k-for-long/
