Bitcoin Faces Volatile Market: Analyst Predicts More Declines as $78K Test Looms

Bitcoin’s price continued its retreat over the weekend, dipping below $80,000 and marking what one analyst has described as an “ugly start” to the week. The leading cryptocurrency fell to just above $80,000 on March 10, and market observers are now predicting further declines in the short term, with some analysts eyeing critical support levels that could dictate Bitcoin’s next move.

Analyst Arthur Hayes Predicts Bitcoin Could Test $75,000

Arthur Hayes, the co-founder of BitMEX and chief investment officer at Maelstrom, weighed in on the situation following Bitcoin’s recent price drop. In a post on X, Hayes predicted that Bitcoin could retest the $78,000 level, following its drop to $80,000. He further warned that if Bitcoin fails to hold that level, the next target could be as low as $75,000.

“It looks like Bitcoin will retest $78,000,” Hayes said, adding, “If it fails, $75,000 is next in the crosshairs.” He pointed out that Bitcoin options open interest (OI) is heavily concentrated in the $70,000 to $75,000 range. “If we get into that range, it will be violent,” he cautioned.

Open interest refers to the total number or notional value of Bitcoin options contracts that have not yet expired. According to data from Deribit, there is $696 million in open interest at the $70,000 strike price, $659 million at $75,000, and $680 million at $80,000. These figures suggest that derivative traders have been betting on Bitcoin’s price decline, particularly in the $70,000 to $75,000 range. Should the price drop into these levels, the resulting price action could be sharp and volatile, given the large amount of open contracts in those ranges.

Recent Bitcoin Price Movement and Market Sentiment

Bitcoin’s price has experienced extreme volatility in the past 24 hours. After falling more than 5% and briefly hitting $80,124, the asset saw a slight recovery to trade at around $81,395 at the time of writing. This marks a continuation of Bitcoin’s unpredictable price movement over the past fortnight, where it has oscillated between the $80,000 and $95,000 levels, driven in part by trade tariff-related news and various crypto announcements from the White House.

Despite the recent dip, Hayes remains bullish on Bitcoin’s longer-term outlook, having previously predicted in late January that the cryptocurrency could fall back to $75,000 before eventually reaching $250,000 in this cycle. He acknowledged that while his prediction may be wrong, he hoped that the downturn wouldn’t last long. A month later, Hayes reiterated his view that Bitcoin could fall to $70,000 as large hedge funds unwind their ETF positions, a prediction that seemed to be borne out when Bitcoin hit its lowest point for 2025 on February 28, dipping into the $78,000 range.

Market Dynamics: Panic Selling and Recent Entrants

Bitcoin’s price decline below $80,000 has been accompanied by a wave of selling activity, with recent entrants into the market being responsible for the majority of the sell-off. Research firm 10x Research released a note on March 10, labeling Bitcoin’s current price drop as a “textbook correction.” According to their analysis, approximately 70% of all selling activity came from investors who had entered the market within the last three months.

This suggests that many of the recent entrants are panicking and selling off their holdings as the price continues to dip, which has contributed significantly to the downward pressure on Bitcoin’s price. Such behavior is common during periods of heightened market uncertainty, where newer investors may be more prone to selling during price corrections due to fear of further losses.

The Fear & Greed Index and Broader Market Sentiment

As Bitcoin’s price struggles, the Fear & Greed Index has once again entered the “extreme fear” territory, registering a reading of 20 on March 10. This index measures the sentiment in the market, with low readings indicating high levels of fear, which often correlate with market pessimism. As Bitcoin’s volatility intensifies, investor sentiment has become increasingly negative, with the index reflecting widespread uncertainty and caution among traders and investors.

Potential Influences on Bitcoin: Inflation Reports and U.S. Federal Reserve Policy

The volatility in Bitcoin’s price is expected to continue this week, as two crucial inflation reports are set to be released in the United States. These reports could significantly influence Federal Reserve monetary policy, particularly if inflation continues to rise. If inflation data points to higher-than-expected numbers, it could prompt the Federal Reserve to adopt more aggressive policies, potentially affecting both traditional and digital markets.

The reaction of the market to these inflation reports will be closely watched, as the Federal Reserve’s actions could play a critical role in shaping Bitcoin’s price trajectory in the near term. Should inflation pressures continue to build, this could result in a shift in investor sentiment, which might either exacerbate the bearish trend in Bitcoin or contribute to a reversal, depending on how traders interpret the data.

Geopolitical and Trade Tensions Impacting Market Sentiment

Adding to the volatility in the global markets is the ongoing trade tension between the United States and Canada. Canada recently responded to U.S. trade tariffs with retaliatory measures of its own. On March 9, former central banker Mark Carney, now elected president of the Liberal Party, delivered a victory speech in which he sharply criticized U.S. trade policies. Carney declared, “Americans should make no mistake… In trade, as in hockey, Canada will win.”

These geopolitical tensions, combined with the shifting dynamics in U.S. and Canadian trade relations, are further adding to market uncertainty. This backdrop of trade-related news could amplify the price volatility of Bitcoin, as global investors react to economic and political developments that could influence traditional financial markets and, by extension, digital assets like Bitcoin.

: Bitcoin Faces Continued Uncertainty

Bitcoin’s price remains under pressure as it hovers around the $80,000 mark. With analysts like Arthur Hayes predicting that Bitcoin could revisit the $75,000 level, and with $696 million in open interest concentrated in the $70,000 to $75,000 strike range, there is significant potential for more downside volatility. The current market sentiment, characterized by panic selling from recent entrants, coupled with a decline in the Fear & Greed Index, signals that investor sentiment remains fragile.

As Bitcoin continues to face volatility, upcoming inflation reports and the ongoing geopolitical developments between the U.S. and Canada could further influence the asset’s price movement. In the near term, Bitcoin’s trajectory remains uncertain, with further declines possible if key support levels fail to hold. Traders and investors will need to carefully monitor the unfolding economic data and market sentiment to determine whether Bitcoin can stabilize or if a deeper correction is in store.