4E Observation: Bitcoin Falls Below $80,000, Will the Downtrend Continue or is it a Good Buying Opportunity?

Concerns About U.S. Economic Recession Intensify

The recent sharp adjustment in the market is directly related to the deterioration of the macro environment. As signs of weakening emerge in the U.S. economy, recession fears have returned.

Data shows that U.S. consumer confidence plummeted in February, marking the largest decline since August 2021. Consumers are cutting back on various expenditures, and data released on Thursday indicated that the U.S. pending home sales index fell 4.6% month-over-month in January, far exceeding expectations and hitting a record low. Additionally, retail giant Walmart's earnings report predicts a significant slowdown in performance growth for the fiscal year 2026, raising investor concerns about the outlook for consumer spending.

Meanwhile, the pace of economic expansion in the U.S. slowed to near stagnation levels in February. The composite PMI for the U.S. hit a 17-month low this month, indicating that "business activity is close to stagnation." Even more pessimistic data shows that the massive service sector, crucial for the U.S. economy, reached a new low since January 2023, entering a contraction zone for the first time in over two years.

As a reflection of recession concerns, the yield on the 10-year U.S. Treasury bond fell below that of the 3-month Treasury bond, resulting in an inverted yield curve, which has historically been a typical warning sign of recession.

A series of weak macro data, combined with Trump's confirmation that tariffs on Canada and Mexico would take effect as scheduled, and threats to impose taxes on the EU and more countries, has significantly heightened expectations of "stagflation" in the U.S. economy. Consequently, investor risk appetite has rapidly declined, leading to multiple days of sell-offs in U.S. stocks, with popular tech stocks experiencing sharp declines ranging from 10% to 35%. For instance, Nvidia has dropped 14.18% this week, while Tesla, often seen as a barometer for the "Trump trade," has fallen 20.18% this week, down nearly 40% since peaking after Trump's election.

Due to the strong correlation between Bitcoin and tech stocks, Bitcoin has also seen a significant drop alongside the U.S. stock market. Additionally, the legislative process for state-level Bitcoin-related bills in the U.S. has begun to face obstacles, and the passage of Bitcoin legislation does not seem to be as smooth as the market had imagined, somewhat undermining confidence in the Trump administration's "crypto-friendly" stance and the commitment to a national Bitcoin reserve.

Continued Withdrawal of Funds

Since February, Bitcoin spot ETFs have experienced a severe "bleeding effect," as they are an important channel for institutional capital inflow, and their fund flow data is a key indicator affecting market confidence. However, throughout February, Bitcoin spot ETFs have almost entirely seen net outflows.

According to coinglass data, from February 18 to 27, U.S. Bitcoin spot ETFs experienced eight consecutive days of net outflows, with a staggering net outflow of $1.14 billion on February 25, setting a record for the largest single-day net outflow since their launch, reflecting institutional investors' pessimistic expectations for short-term price trends.

On-chain data also indicates that liquidity in the Bitcoin market is rapidly shrinking, especially with the withdrawal of large funds. According to well-known analyst Murphy, the whale group (transactions over $10 million) that previously dominated market gains saw its liquidity share drop sharply from 62% in November 2024 to 38% in February 2025. The high-net-worth group (transactions between $1 million and $10 million) has also been reducing holdings since January, with liquidity share falling from 36% to 30%. Meanwhile, the proportion of retail investors is increasing, indicating that while retail investors are entering the market amid FOMO as Bitcoin breaks through $100,000, large funds are gradually withdrawing.

Further data shows that the withdrawal of large funds is highly correlated with profit-taking; whenever wallets holding 1,000 to 100,000 BTC begin to cash out on a large scale, the upward trend of Bitcoin tends to come to an end. This phenomenon has been clearly observed in 2017, 2021, and 2025, closely aligning with the timing of whale fund withdrawals. The current market is experiencing a typical pattern of capital flow: large funds are exiting for profits, while retail investors are late to the game.

Is It Time to Buy the Dip?

As the market continues to decline, Bitcoin has fallen below $79,000, plummeting over 18% in the past week. Amid this significant short-term drop, the market is beginning to ponder whether it is time to buy the dip.

Currently, the cryptocurrency market is trapped in a vortex of multiple adverse factors: the shadow of economic stagflation looms over all risk assets, the tech stock sell-off is exerting downward pressure on Bitcoin through risk appetite transmission mechanisms, and the internal funding structure of the crypto market is severely imbalanced—institutional capital is continuously flowing out, whale accounts are accelerating profit-taking, and retail buying momentum is waning. These factors collectively contribute to the depth and severity of this decline. Historical lessons reveal that when market liquidity shifts from institutions to retail investors, it often signals that the critical turning point between bull and bear markets is near.

Although short-term overselling may trigger a technical rebound, with uncertainties surrounding Trump's policies, unclear prospects for the Federal Reserve's monetary policy, and the fact that the biggest positive for Bitcoin, the national strategic reserve, won't have news for another six months, investors should be highly vigilant about the risks of "buying the dip traps."

In a market atmosphere filled with panic, maintaining financial flexibility and sufficient liquidity may hold more long-term strategic value than blindly chasing rebounds. As a global partner of the Argentine national team and the only recommended trading platform, 4E offers financial products with an annual yield of up to 8% on USDT, allowing for flexible investment without idle funds, while waiting for market changes.