Reasons Behind Bitcoin’s Decline

• Macro pressure: The Fed pushing rate cut expectations into the summer and a resilient dollar index have accelerated capital outflows from risk assets. In this environment, Bitcoin has struggled to find support.

• Expectation realization: Optimism around crypto regulation following Donald Trump’s election victory had already been priced in. With no fresh or concrete catalysts, investors shifted toward profit-taking.

• Derivatives market signal: A sharp increase in put demand in the options market indicates that investors are actively positioning for downside scenarios.

Macro Winds Have Turned Against Risk Assets

Entering February, global risk sentiment tightened noticeably. Rising U.S. Treasury yields and a strong dollar failed to provide a supportive backdrop for crypto assets. On the Fed side, postponed rate cut expectations limited upside appetite for risk assets like Bitcoin.

At this stage, selling pressure does not appear panic-driven. Instead, position reduction and a wait-and-see approach dominate amid heightened uncertainty.

Options Market Is Pricing the Downside Scenario

While the pullback in the spot market appears measured, the clearest signal is emerging from derivatives. As Bitcoin slipped below the $80,000 level, investors increasingly turned to hedging downside risks.

Bitcoin put options with a $75,000 strike price quickly became among the most actively traded contracts. According to Deribit data, open interest at this level has reached $1.159 billion. At the same time, open interest in $100,000 call options stands at $1.168 billion. This near balance reflects a market that remains cautious rather than decisively directional.

Market observer GravitySucks noted a sharp surge in put buying during the period when BTC’s spot price fell rapidly from $88,000 to $75,000. These moves suggest pre-planned strategies rather than reactive trades.

Post-Trump Optimism Fades as a New Equilibrium Forms

The bullish narrative that followed Trump’s election victory had largely been reflected in prices. Bitcoin’s failure to hold above the $120,000 level signaled a weakening of that expectation. The subsequent decline appears to be a textbook case of expectation realization.

Delays in crypto market structure legislation further weighed on sentiment. The heavy put demand now visible in the options market clearly shows that investors are no longer focused solely on upside scenarios.

Bitcoin remains a strong asset over the long term. In the short term, however, the market is less concerned with how high prices can go and more focused on which support levels may be tested next.

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Gold also reached a new record high as investors sought safe-haven assets, with its price hitting $3,433. The crypto market showed signs of recovery with strong buying momentum after last week’s turbulence. Rekt Capital stated that Bitcoin has started a new uptrend by holding above $104,400. As a result, investors continued to turn toward risk assets ahead of the critical FOMC decision. 

FOMC and BoJ Decisions to Shape Market Direction 

JPMorgan analysts reminded that Iran controls 3.5% of global oil supply. The potential for Brent oil to reach $130 per barrel has raised expectations of a new wave of inflation in the markets. If this level is reached, U.S. inflation could hit 5%, possibly delaying the Fed’s rate cut plans. 

Meanwhile, U.S. Federal Reserve Chairman Jerome Powell made cautious remarks about interest rate cuts. Powell refused to take hasty action, considering that Trump’s tariff policies could drive prices higher. Still, 40% of investors in the futures market expect two rate cuts by the end of the year. On the other hand, the Bank of Japan (BoJ) is considering postponing its rate hike to Q1 2025 due to problems in the bond market. According to Reuters, BoJ plans to maintain tight monetary policy during this period. 

Strait of Hormuz Crisis and $130 Oil Scenario Shake the Markets 

Some analysts at JPMorgan reiterated Iran’s 3.5% share in global oil supply. Combined with geopolitical risks, they forecast oil prices could exceed $130 per barrel. Such an increase could push U.S. consumer inflation close to 5%. The Kobeissi Letter emphasized that this scenario would significantly delay the Federal Reserve’s anticipated rate cuts. 

Experts also defined the potential closure of the Strait of Hormuz as the most severe geopolitical scenario. Iran could use its dominance over the strait to disrupt global energy supply. 

Bitcoin continues to stay resilient amid all these developments. Investors are still in search of safe havens amid geopolitical tensions and inflation pressures. BTC’s trading volume rose 14%, surpassing $40.5 billion, indicating a significant increase in market liquidity. 

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