Bitcoin Price Forecast: BTC is 20% down from its ATH, trading below $89,000

Bitcoin (BTC) price hovers around $88,800 on Wednesday after reaching a low of $86,050 the previous day. US Bitcoin spot Exchange Traded Funds (ETF) supported BTC's price correction, recording the highest single-day outflow of $937.90 on Tuesday. A K33 report highlights how Micro Strategy's latest purchase of BTC was not well-received by the market while it processed a resurgence in concerns over US President Donald Trump’s tariffs.

Bitcoin spot ETFs record the highest single-day outflow 

Bitcoin hovers around $88,800 on Wednesday after falling nearly 20% from its all-time high (ATH) of $109,588 in mid-January. The weakening institutional demand in the previous two weeks supported Bitcoin's price correction. 

As reported earlier, Bitcoin spot ETF data recorded net outflows of $540 million last week, extending the previous week's $580.2 million withdrawal trend. Moreover, it continued its runoff as of this week and registered a $937.90 million outflow on Tuesday, the highest single-day outflow since its ETFs launch in January 2024. If the magnitude of the outflow continues and intensifies, the Bitcoin price could see further corrections.

Total Bitcoin spot ETF net inflow chart. Source: Coinglass

Bitcoin slides below $88,000 despite Micro Strategy BTC purchase, Trump tariffs concerns weigh in 

Tuesday's K33 Research 'Ahead of the curve' report highlights how Micro Strategy's announcement of its latest purchase of 20,356 BTC was not well-received by the market while it processed a resurgence in concerns over President Trump’s tariffs. 

The report explains that Micro Strategy (MSTR) announced yet another large BTC purchase (20,356 BTC) this week, but market enthusiasm for the company has dwindled. As of Monday's close, the company's enterprise value traded at $73 billion vs. the company's BTC treasuries, sitting at a valuation of $45.6 billion. 

MSTR's current valuation multiple of 1.6 times means the BTC treasury value is the lowest since July 2024, as shown in the graph below. At these multiples, it's harder for the company to justify further equity dilution. This means that a big demand source for BTC is facing a softened ability to buy with size.

"A fall in demand for MSTR exposure offers more confluence to our view of a clear dropoff in BTC demand, along with shrinking premiums, softening volumes, muted CME activity, and dwindling ETF flows. These factors continue to favor a low-risk profile and patience," says a K33 analyst.

MSTR enterprise value premium to BTC holdings chart. Source: K33 Research

The report further explained that Bitcoin correction and volatility this week were amplified by offshore perp traders attempting to buy the dip with leverage.

Last week, the crypto market experienced its largest heist in the history of $1.4 billion. The hack was followed by prompt de-risking. Bybit traders reduced exposure and withdrew funds from the platform as the exchange saw its BTC balance decline by 20,000 BTC in the following days. 

This reduced exposure was short-lived. As prices headed south on Monday evening amidst Donald Trump confirmed that he'd go forward with Canadian and Mexican tariffs, and offshore traders reentered BTC perps, pushing notional exposure above pre-Bybit hack levels, as illustrated in the graph below on the left. 

The report continued that the Perps have traded at discounts to the spot for several weeks, but this discount narrowed amidst the open interest spike. Further, funding rates on Binance reached neutral terrain as leverage climbed, pointing toward traders entering longs with leverage. The market quickly punished this behavior, with long liquidations amplifying the move lower. The willingness to buy the dip with leverage is an unfortunate observation in a market facing multiple signs of dampened demand impulses.

BTC Perps: Notional OI chart (Left) and BTCUSDT Perp OI vs. Discount to spot chart (Right) Source: K33 Research

In an exclusive interview, Agne Linge, Head of Growth at WeFi, told FXStreet, "The crypto market is experiencing an intense selloff, with combined liquidation hitting $1.34 billion, the highest single-day liquidation this year."

Linge continued that US President Donald Trump has revealed his plans to implement new tariffs on Mexico and Canada starting in March. The massive liquidations from the FTX Estate are also a major concern, and if states in the US continue to shun the Bitcoin reserve bill, the negative sentiment might compound in the coming weeks. 

Bitcoin Price Forecast: BTC bears aiming for $85,000 level

Bitcoin price broke out of its prolonged consolidation phase on Monday, slipping below the $94,000 support level and closing at $91,552 after a 4.89% decline. BTC continued its correction by 3.14% on Tuesday, reaching a low of $86,050. At the time of writing on Wednesday, it hovers around the $88,800 level.

If BTC continues its correction, it could extend the decline to test its next support level at $85,000.

The daily chart's Relative Strength Index (RSI) indicator reads 30, pointing downwards and reaching its oversold levels, indicating significant selling pressure and may be due for a potential reversal or bounce. However, traders should be cautious as the RSI may remain below its oversold levels and continue its correction.

BTC/USDT daily chart

However, if BTC recovers, it could extend the recovery to retest the $100,000 psychological level.