BTC Suffers Largest 3-Day Drop Since FTX Crash – Is More Pain Ahead?

Bitcoin Faces Largest Three-Day Decline Since FTX Collapse – What’s Next?

Potential downside could see Bitcoin slide to the $72,000–$74,000 range, warns analyst.

Bitcoin’s (BTC) prolonged stability above $90,000 has come to an abrupt end this week, leading to a sharp downward move.

The cryptocurrency has recorded a 12.6% drop in just three days (measured by UTC hours), marking its steepest decline since the FTX collapse in November 2022, according to TradingView data.

This sell-off aligns with previous analysis from CoinDesk, which pointed to investor frustration over President Donald Trump’s administration delaying its promised national Bitcoin reserve and tightening fiat liquidity policies.

Institutional demand for both Bitcoin and Ethereum (ETH) has softened, pushing the CME futures market closer to backwardation—a condition where spot prices exceed futures prices. Additionally, Wall Street’s tech-heavy Nasdaq index has faced selling pressure, compounding Bitcoin’s struggles.

What Comes Next?

The immediate outlook suggests further downside risk, especially with Trump’s tariff policy on Canada and Mexico set to escalate as the March 4 deadline approaches. The market’s risk-off sentiment could persist, adding to BTC’s challenges.

Core PCE May Not Provide Relief

Investors hoping that Friday’s U.S. core Personal Consumption Expenditures (PCE) index—widely regarded as the Federal Reserve’s preferred inflation gauge—could support risk assets might be disappointed, according to Noelle Acheson, author of the Crypto is Macro Now newsletter.

Economists project a 2.6% year-on-year increase in January, down from December’s 2.8%, per FactSet estimates quoted by Morningstar. Typically, easing inflation would suggest a greater likelihood of Federal Reserve rate cuts, fueling risk-on sentiment.

However, the market may focus on leading inflation indicators instead. Recent data from the Conference Board shows consumer one-year inflation expectations jumped from 5.2% to 6% in February. Additionally, both two-year and five-year inflation swaps have been trending upward, as noted by CoinDesk earlier this month.

According to Acheson, markets could interpret any slowdown in core PCE growth as a sign of broader economic weakness.

“Even if the PCE print is softer than expected, it could reinforce concerns about slowing growth, sending markets into further uncertainty,” Acheson wrote in Wednesday’s newsletter.

She added that the current risk-averse sentiment stems largely from macroeconomic factors, including tariffs, high corporate valuations, and heavy portfolio exposure to AI-related assets.

That said, Acheson believes Bitcoin could regain stability due to its dual nature as both a risk asset and a store of value akin to digital gold.

“For most portfolios, Bitcoin’s ability to act as both a risk asset and a safe haven means that at some point, long-term investors will start accumulating, which in turn could encourage traders to re-enter the market,” she noted.

Key Support Levels and Potential Recovery Zones

From a technical standpoint, breaking below a long-standing trading range, as Bitcoin has done, often results in a drop roughly equal to the range’s breadth. In this case, breaching the $90,000–$110,000 range could imply a potential decline toward $70,000.

“In a worst-case scenario, Bitcoin could slip to the $72,000–$74,000 range before finding solid support,” said Markus Thielen, founder of 10x Research, in a note to clients on Wednesday. He pointed to Bitcoin’s correlation with global central bank liquidity trends as a contributing factor.

However, Bitcoin has since rebounded to $86,000 at the time of writing, after briefly testing the $82,000 level—previously identified as a demand zone by Thielen. This zone is based on the short-term holders’ realized price metric, which represents the average price at which investors holding BTC for less than 155 days made their purchases.

“Historically, Bitcoin rarely trades below this level for long during bull markets, while in bear markets, it tends to stay below for extended periods. During the summer 2024 consolidation, Bitcoin dropped $9,616 below this metric, now at $92,800,” Thielen explained.

“If the 2024 pattern repeats, Bitcoin could decline to around $82,000 before stabilizing,” he added.

Regulatory Clarity Could Offer a Market Boost

Some analysts remain optimistic that regulatory clarity could help stabilize Bitcoin’s price. Wednesday’s U.S. Senate Committee hearing on “Exploring a Bipartisan Legislative Framework for Digital Assets” could signal progress on clearer regulations.

“A well-defined regulatory framework could be exactly what’s needed to encourage institutional participation, unlocking the next wave of capital inflows. If the U.S. establishes clear rules for stablecoins and digital assets, we could see significant institutional allocation into crypto,” said Matt Mena, crypto research strategist at 21Shares, in an email.

While short-term price action appears uncertain, long-term investors are closely watching developments in regulation, macroeconomic policy, and institutional sentiment for signs of renewed market strength.