U.S. president Donald Trump’s surprise nomination of former Fed governor Kevin Warsh as the next Federal Reserve chair boosted the dollar, unwound the precious metals rally, and is bringing bitcoin below a key support level.
Onchain data shared by Glassnode shows bitcoin was consolidating just above key structural support around $83.4K, the lower bound of its short-term holder cost basis model.
A breakdown below that zone could open the door to a deeper slide toward $80.7K, the so-called True Market Mean.
That breakdown is occurring. Over the past 7-day period bitcoin lost more than 9.2% of its value and now trades at $81,200.
The broader market, measured via the CoinDesk 20 (CD20) index, lost 12.4% of its value over that period. That has meant the Crypto Fear & Greed Index dropped to “extreme fear” over the week.
Glassnode’s report notes that short-term holder supply held at a loss with BTC above that level remained at 19.5%, well below the 55% capitulation threshold, suggesting some resilience despite downside pressure. However, buyer conviction is being tested as price drifts lower.
On the derivatives side, funding rates remain muted, pointing to cautious speculative appetite. Options markets are pricing in greater demand for downside protection, with dealer gamma flipping negative below $90K. That increases the risk of volatility spikes if support breaks.
Taken together, the data paints a picture of a fragile but not yet broken market. Liquidity remains the key variable.
The crypto market may currently be gripped by fear, but that could be a good signal.
According to crypto analytics platform Santiment, sentiment across various cryptocurrency communities has plunged to extreme lows, levels that have historically preceded price recoveries.
In a report, Santiment highlighted the rise in bearish commentary on social media as a rare bright spot in an otherwise downbeat environment.
“While network fundamentals are stagnant, crowd sentiment has hit extreme negativity levels,” the firm wrote. “Historically, this excessive bearishness is a strong contrarian indicator that a local bottom could be near.”
While prices have been dropping throughout the last few months, long-term bitcoin holders are selling at the fastest pace since August. Crypto prices fell over the week, seemingly over the U.S. dollar’s decline reversing.
Some industry observers say the current mood may be short-lived, however.
Bitwise’s CIO Matt Hougan had recently joined CoinDesk’s Markets Outlook, where he said crypto is in the late stages of a bear-market bottom. Historically, crypto markets have tended to move in the opposite direction of the crowd, the report points out.