The only resilient cryptocurrency, Bitcoin, is also starting to teeter. On the early morning of the first day of February, a sudden plunge brought it down to $75,000, completely wiping out the long-trusted insider whales.
It has also reached the cost price of the largest Bitcoin holder, Strategy. Strategy holds a total of 712,647 BTC, with an acquisition cost of approximately $54.19 billion and an average cost of about $76,037 per BTC. Tens of billions of dollars in profits have evaporated.
After nearly a year, we are once again seeing Bitcoin with a price starting with 7. The peak of the 2021 bull market was $69,000, which is very close.
As usual, we still need to find the reasons.
Geopolitical Conflict
First is international conflict. On X, known as the fastest news platform in the world, several videos show explosions occurring in multiple locations in Iran. So far, neither the United States nor Israel has commented, making it impossible to verify the authenticity.
Iran is also conducting military exercises in sensitive areas to show it is not afraid at all.
Of course, the conflict between the United States and Iran seems to be something already publicly discussed in the market but not yet confirmed. A few days ago, the movements of the U.S. aircraft carrier and Iran’s response caused a sharp drop in global risk assets, including gold. Increased uncertainty always causes Bitcoin, which trades 24/7, to fluctuate first.
Government Shutdown
In the early hours of the 31st local time, the U.S. government officially began a partial shutdown. So fast—the last shutdown feels like it was just last year.
Previously, the U.S. Senate passed a spending bill to fund most federal government departments and submitted it to the House of Representatives for review. However, since House members are not in Washington and will not return until Monday (February 2), the Senate vote could not prevent a partial government shutdown.
Compared to the record-breaking government shutdown last time, this one appears less severe, but it is still not good news. The main reason is that hundreds of billions of dollars in liquidity are locked up, and with the weekend already having poor liquidity, there couldn’t be a worse outcome.
Fear of Monday
With the epic plunge in gold and silver, rumors are circulating that some U.S. banks have already started to fail. The market is still pricing in uncertainty, and what will happen on February 2 is being watched globally.
How Low Could It Go?
Chris Burniske, a partner at Placeholder VC, previously stated that key support levels to watch are $80,000, $74,000, $70,000, $58,000, and $50,000 or below. Short-term fluctuations are not the core concern. If the price rebounds, hold and gradually diversify allocations. If a deep correction occurs, treat it as an opportunity to increase holdings in Bitcoin and high-quality crypto assets.
Trader Merlijn The Trader previously indicated that an important support level for Bitcoin is around $80,000. Historical data shows that approximately 127,000 BTC were purchased within that price range previously.
