Bitcoin is One Breakdown Away From Hitting $85,000 — Fed Pause, FTX Key Bearish Drivers

A mix of fundamental, technical, and on-chain Bitcoin indicators is raising the possibility of a market breakdown in the coming weeks, during which the price could drop to as low as $85,000.

Let’s examine these factors in detail.

Bitcoin Fundamental Analysis: Rate Pause, FTX Repayment Trigger Selloff Risks

On Feb. 17, Federal Reserve Governor Christopher Waller reinforced expectations that interest rates will remain stable. However, if inflation eases, the central bank may consider cutting “at some point this year.”

No rate cuts mean no fresh liquidity. Without lower rates, there’s no added incentive for risk-taking in speculative markets like crypto. US consumer prices could stay higher for long if US President Donald Trump goes ahead with his proposed global tariffs.

High liquidity environments have fueled Bitcoin’s major rallies since March 2020. If the Fed maintains a restrictive stance, Bitcoin’s upside potential could remain limited in the short term.

FTX Liquidations Could Inject $16 Billion in Bitcoin Supply

Further downside risks for Bitcoin come from the impending reimbursement of FTX creditors.

FTX is set to distribute approximately $16 billion within the next 60 days, beginning with an initial payout between $6.5 billion and $7.5 billion on Feb. 18, 2025. The trustee will fully reimburse creditors, including an additional 9% interest accrued from Nov. 11, 2022, to the payout date.

As usual, traders have started panicking under the impression that most FTX creditors will sell their Bitcoin, thus creating a $16 billion sell wall in the market.

A $16 billion selling pressure seems very little for a market worth over a trillion dollars. However, historical data shows panic-selling ahead of key reimbursement events (for instance, Mt. Gox), which could dampen Bitcoin’s upside outlook in the short term.

Whale Activity at Multi-Year Highs: A Bearish Signal?

Adding to the bearish picture, the Exchange Whale Ratio—a metric that tracks the top 10 inflows to spot exchanges as a percentage of total inflows—has surged to a multi-year high, according to CryptoQuant.

• A rising whale ratio historically correlates with price declines as large holders move coins to exchanges for potential selling.
• Since late 2024, whale activity has increased, aligning with Bitcoin’s struggle to break higher.
• Over the past two weeks, whale inflows have slightly declined, but not enough to confirm a trend reversal.

This means that while there’s still hope for a bullish rebound, the market needs clear signs of reduced selling pressure from large holders. If whales continue moving Bitcoin to exchanges, it could signal more downside ahead.

Bitcoin’s Trading Range Signals Potential Breakdown

Bitcoin has tested the lower trendline of the ascending triangle multiple times in recent months, each time rebounding toward resistance. This pattern typically signals an uptrend continuation, but current market dynamics suggest the risk of a downside break.

Note that:

• Bitcoin has been stuck inside the range defined by its 50-day (~$97,900) and 100-day (~93,850) EMAs for almost two weeks.
• It shows traders’ growing indecisiveness about the next market move.
• Negative fundamental and on-chain signals could influence traders to reduce exposure.
• Should it happen, Bitcoin could break below the 100-day EMA and continue to decline toward the 200-day EMA at around $85,000.
• A rebound from the 100-day EMA and the triangle’s lower trendline could send Bitcoin toward the triangle’s upper trendline resistance at around $106,350.