27.02.202511:45 Forex Analysis & Reviews: Bitcoin pulls back

The leading cryptocurrency has once again disappointed market participants with a sharp decline. Many analysts link this to geopolitical tensions and prevailing bearish sentiment in the crypto market. However, Bitcoin aims for a comeback, though the timeline remains uncertain.

Bitcoin's price fell sharply on Wednesday, February 26, dropping below $85,000 and approaching $82,000. The political momentum that had fueled its recent rise began to fade. The leading digital asset has now lost nearly 25% from its all-time high of $108,000. On Thursday, February 27, BTC was trading near $86,460, marking its lowest level of the year.

In recent months, Bitcoin hit record highs amid shifts in the US political landscape following Donald Trump's re-election. The Republican Party gained control of both the House of Representatives and the Senate and made Bitcoin a key part of its platform. This sparked optimism in the crypto and blockchain communities. However, regulatory clarity did not improve, dampening enthusiasm.

Tim Enneking, managing partner at Psalion, noted that the post-election Bitcoin surge was followed by only statements of intent at federal and state levels, as well as in other countries. According to him, the US government is now in disarray due to Trump's tariff policies, Elon Musk's influence on DOGE, and Republican efforts in Congress to address the budget deficit.

Amid this uncertainty, investors are offloading risky assets like cryptocurrencies. Stock market indices, including the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite, have also declined since the start of the month.

Experts note that Bitcoin remains on a downward trajectory. It recently fell below $89,000, losing 8.5% in just a week. This prolonged decline has raised investor concerns about whether BTC has hit bottom. Some analysts believe the current market sell-off could signal a turning point for Bitcoin.

Bitcoin capitulation: Has the market bottomed out?

Crypto analyst Caueconomy recently called this the "biggest Bitcoin capitulation of 2025." He compared it to a similar event in August 2024, suggesting that Bitcoin might have reached a local bottom. He noted that over 79,000 BTC were sold at a loss in a single day, totaling $1.7 billion. This sell-off mirrors the one triggered by Japan's interest rate hike last year, which led to a widespread reduction in leveraged positions.

According to Caueconomy, Bitcoin's previous capitulation in August 2024 marked a short-term bottom. Afterward, the market stabilized, and Bitcoin rallied to $100,000 by December 2024. While history may be repeating itself, the cryptocurrency's future trajectory remains uncertain.

Additional bearish factors

Many analysts cite multiple factors behind Bitcoin's decline. Mike Marshall, senior researcher at Amberdata, believes the drop to $85,000 reflects growing investor anxiety. The exit of major funds from Bitcoin ETFs and a broader sell-off in tech stocks have added to the pressure.

Marshall has noted that Bitcoin tends to follow the movement of tech stocks, adding that when markets like Nasdaq decline and companies such as Tesla and Nvidia face difficulties, BTC also comes under pressure.

Trump's new tariffs have worsened Bitcoin's outlook. Other bearish factors include geopolitical instability, weakening consumer confidence, declining business activity, and inflation concerns. Brett Sifling, an asset manager at Gerber Kawasaki Wealth & Investment Management, pointed out that Bitcoin remains closely correlated with the stock market.

Sifling pointed out that, amid a broader shift away from riskier assets in the stock market, Bitcoin had mirrored Nasdaq's recent 5% decline. He also highlighted a significant outflow from spot Bitcoin ETFs, with nearly $1 billion withdrawn in a single day this week.

On Tuesday, February 25, spot Bitcoin ETFs in the US saw record daily outflows since their launch over a year ago. According to SoSoValue, net outflows nearly doubled, reaching $1.01 billion. This marked the sixth consecutive session of withdrawals. Since Bitcoin ETFs were approved in January 2024, total inflows have now fallen to $38 billion.

Analysts at QCP Capital believe institutional demand for BTC has peaked. The market faces continued uncertainty for several weeks following Trump's decision to impose tariffs on Canadian and Mexican goods and restrict Chinese investments in the US economy. As a result, many investors are exiting the crypto market to reduce risks.

Binance analysts argue that the current crypto market downturn, driven by economic and political tensions, is temporary. They view Bitcoin's decline as a tactical pullback rather than a trend reversal. They believe that the leading cryptocurrency could recover quickly and reaffirm its dominance in the global digital asset market.