Bitcoin Fails to Reclaim $70,000… Three Downside Risks Flagged by Analysts

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Bitcoin (BTC) is struggling below a key psychological resistance level, and a leading research firm has warned of further downside risks, citing increased correlation with the stock market and a lack of liquidity support.

According to a February 21 report by NewsBTC citing research firm Ecoinometrics, the Bitcoin market is not currently in a bottoming phase but is instead exposed to three downside drivers. The report identified weakening stock market momentum, changes in Bitcoin’s volatility structure, and the Federal Reserve’s neutral monetary policy stance as the key factors likely to pressure prices lower.

Ecoinometrics highlighted that Bitcoin no longer moves independently but is closely linked to the stock market and the broader macroeconomic environment. With the tech-heavy Nasdaq 100 index stagnating for the past three months, the firm warned that if equities enter a clear downtrend, Bitcoin could face a sharp parallel decline. In particular, Bitcoin’s 200-day moving average has begun to slope downward, a technical signal often interpreted as a classic sign of a bear market.

Changes in market structure are also adding downward pressure. Unlike previous cycles, capital inflows and outflows through spot Bitcoin ETFs now play a decisive role in price formation. While institutional capital tends to be more consistent and systematic than retail investment, it can also become a powerful driver of declines when risk-off sentiment spreads, triggering significant outflows from spot Bitcoin ETFs. The recent moderation in volatility further supports the likelihood of a gradual decline rather than an explosive rebound.

On the monetary policy front, there is also a lack of supportive catalysts for Bitcoin. Ecoinometrics expects the Federal Reserve to refrain from rushing into rate cuts while inflation remains not fully under control. “The Federal Reserve’s neutral stance may not deliver a sudden shock to markets, but it is also unlikely to serve as a source of liquidity that can defend risk assets during downturns,” the report stated.

Amid these conditions, Bitcoin appears to be at a critical structural inflection point, with growing calls for caution against further price corrections. Ecoinometrics warned that the current price consolidation may not represent a confirmed bottom but rather a temporary pause within a broader downtrend. Investors are advised to closely monitor macroeconomic indicators and equity market movements to assess whether Bitcoin can maintain its long-term support levels.

Disclaimer: This article is for investment reference only and we are not responsible for any losses incurred based on it. The content should be interpreted for informational purposes only.