Bitcoin's 'Extreme Fear' Plunge: Fourth Consecutive Monthly Drop Tests Key Support
Bitcoin (BTC) has notched its fourth consecutive monthly decline, marking its longest sustained downturn since the depths of the 2018 crypto bear market. The weekend saw a sharp sell-off that briefly pushed the premier cryptocurrency below $75,000 before a fragile recovery to around $78,500. The slide has erased over 13% of Bitcoin's value in the past 30 days, sparking intense debate over whether a deeper correction is imminent.
The downturn appears fueled by a confluence of macroeconomic anxieties. Renewed global trade tensions, highlighted by former U.S. President Donald Trump's recent tariff threats, have triggered a broad flight from risk assets. This macro chaos culminated in a brutal 24-hour period ending January 30, where over $2.2 billion in leveraged crypto positions were forcibly liquidated, with long traders absorbing the majority of the pain.
The pervasive nervousness is quantified by the Crypto Fear & Greed Index, which has plummeted to a reading of 14—solidly in "Extreme Fear" territory. Notably, the panic was not confined to digital assets. Traditional safe havens like gold and silver also experienced historic single-day drops, suggesting a market-wide scramble for cash and dollar liquidity, undermining their typical role as portfolio stabilizers during equity stress.
While a modest green candle brought brief respite to traders on Monday, with most major altcoins following Bitcoin's tentative bounce, the underlying technical picture remains challenging. Key momentum indicators on the daily chart paint a bearish tableau. The 50-day Exponential Moving Average (EMA) sits firmly below the 200-day EMA, a classic confirmation of a sustained downtrend. Furthermore, the Average Directional Index (ADX), which measures trend strength, reads a decisive 32.1, well above the threshold that confirms a powerful trend is in place.
A potential silver lining for weary bulls is the Relative Strength Index (RSI). Having dipped to 30, Bitcoin is now technically "oversold," a condition that has historically preceded short-term relief rallies. On shorter time frames, the $74,000 level has acted as critical support, sparking the recent bounce. However, the four-hour chart shows struggling momentum, with the ADX screaming at 57.4, indicating the downward trend's force remains potent.
Market sentiment has undergone a dramatic shift. On prediction market platform Myriad, traders now assign a 67.9% probability that Bitcoin will fall to $69,000 before it can rally back to $100,000—a stark reversal from the overwhelmingly bullish odds prevalent just two weeks ago.
Analyst Outlook: The immediate battleground is the $74,000 support zone. A sustained hold above this level could pave the way for consolidation between $78,000 and $85,000. A decisive break below, however, would likely target the next significant support near $69,000, which would represent a roughly 45% retracement from October's all-time high. On the upside, any recovery attempt faces immediate resistance near the $80,600 level (200-day EMA zone), with a more formidable ceiling around $91,300 where multiple technical barriers converge.
Sarah Chen, Portfolio Manager at Horizon Digital Assets: "This is a classic macro-driven liquidity squeeze. The correlation with gold's sell-off is telling. It's less about crypto-specific news and more about investors de-risking globally. The oversold RSI suggests we're due for a technical bounce, but the trend won't reverse until macro headwinds subside."
Marcus "CryptoWolf" Reynolds, Independent Trader: "The charts are an absolute bloodbath. The 'extreme fear' is warranted. Everyone who bought the top is now getting liquidated. This flush was needed, but calling a bottom here is gambling. If $74K breaks, we're going to $69K faster than you can say 'HODL.'"
Dr. Aris Thorne, Economic Historian at Kenyon College: "The simultaneous sell-off in both crypto and traditional stores of value is a fascinating case study. It underscores that in acute systemic stress, the dominant reflex is still a dash for cash and sovereign currency, challenging long-held narratives about the decoupling of these asset classes."
Layla Jones, Retail Investor: "It's exhausting. Every time we get some momentum, something in the 'real world' blows it up. They say 'zoom out,' but it's hard when your portfolio is down 30%. The fear index is right—we're all scared. Are the big players just shaking us out before the next leg up?"
The views and opinions expressed are for informational purposes only and do not constitute financial or investment advice.