Bitcoin loses market compass, institutional funds shrink, entering a difficult period

As of the end of February, the Bitcoin market is losing its “compass.” This once-guiding indicator, supported by institutional demand and market enthusiasm, now points nowhere. Under the dual pressures of liquidity tightening and changing institutional attitudes, the market is wandering in a state of confusion. The entire market is like a ship without a rudder, lacking the key compass to guide its course.

Technical Support Fading, Where Will the Compass Point?

Bitcoin has entered a phase of no effective expansion. When the price fell below $79,000—the “market true moving average”—the long-standing technical support line that upheld the price was completely broken. Historically, this level marked the transition from painful correction to exuberant growth. Its loss now signifies that the market’s compass has failed. The new technical and psychological “bottom” has moved down to $54,900, the lowest point in the market’s most severe correction in history.

Currently, Bitcoin trades around $64,940, down 1.44% in 24 hours. This trading below key support indicates the market is in a state of technical chaos, losing its previously clear upward trajectory. Ethereum’s performance is also not optimistic, priced at $1,900, with a 24-hour decline of 2.44%. The entire market is searching for new support levels.

Liquidity Exhaustion and Institutional Apathy

The marginal demand supporting price rebounds has dried up, and the market has lost its main buffer. Net inflows into US spot ETFs have turned negative, meaning the once-constant institutional demand has shifted into a constraining force. Institutions, the “invisible hand,” have gone from drivers to restrainers, shattering previous market optimism.

Even more concerning is that institutional indifference is extending into the derivatives market. Although extreme panic sentiment has eased and implied volatility has decreased, this is not driven by bullish confidence but by investors unwinding hedges against declines. They are not opening new long positions, reflecting a lack of genuine market confidence. All participants are watching and defending, unwilling to take active steps.

Macro Pressures and a Glimmer of Hope in the Search for Bottom

The hawkish tone of the Federal Reserve and uncertainties around rate cuts act like a glass ceiling, suppressing the rebound potential of risk assets. Amid unclear monetary policy, institutional investors’ appetite for high-risk assets like Bitcoin is at a historic low. Macro policies are a significant factor dampening the market’s ability to find its true direction.

However, the market is not entirely hopeless. On-chain data shows some positive signals. Indicators like “coins destroyed per day” suggest that strong hands (long-term holders) have stopped actively selling and are instead accumulating. This indicates the market is in the “late bear market” stage—though dull and lacking heat, this phase often appears before the final bottom. The stability of strong hands’ holdings is a sign that the market is ultimately finding a new compass and establishing a new direction.

The market swings between contraction and capitulation, but this stagnation may be a necessary pause before rebirth. When the compass points clearly again, that will be the true opportunity.