Warning Signals: Bitcoin 365-Day Moving Average At Risk of Collapse

The cryptocurrency market is currently facing significant bearish pressure, with Bitcoin (BTC) struggling to reclaim previously crucial support levels. 

Recent data from CoinGecko indicates that Bitcoin has retraced nearly 6% over the past week, a decline that has impacted other major cryptocurrencies, including Ethereum (ETH), XRP, Binance Coin (BNB), and Solana (SOL), all of which have experienced double-digit losses during the same period.

This downturn marks a stark contrast to the bullish sentiment observed earlier in October, when Bitcoin surged to record its current record high slightly above the $126,000 mark due to a wave of margin buying. 

However, the euphoria was short-lived, as approximately $20 billion in leveraged positions across the crypto market were abruptly liquidated just days later on October 10, contributing to the ongoing lack of confidence among investors.

Michael Novogratz’s Galaxy Digital recently revised its year-end Bitcoin price target down to $120,000, a significant cut from the previous estimate of $185,000, attributing this adjustment to the “significant leverage wipeout.” 

Market analytics firm CryptoQuant has pointed out that Bitcoin’s drop below its 365-day moving average near $102,000 could signal a deeper retreat. This moving average has historically acted as a critical support level during this bull cycle, and its failure to hold could lead to a more substantial correction in Bitcoin’s price. 

In their analysis, CryptoQuant experts elaborated on the conditions necessary for Bitcoin to reverse its current trajectory and potentially reach new all-time highs. They observed that Bitcoin led a global risk-off movement, testing the critical $100,000 support level. 

This decline was influenced by a stronger dollar and ongoing uncertainties regarding Federal Reserve (Fed) policy, which have dampened broader risk appetites across various asset classes. 

Notably, there have been four consecutive sessions of approximately $1.3 billion in net outflows from US spot BTC ETFs, reversing what had been one of the strongest tailwinds for the market in 2025.

This diminished demand in the spot market has coincided with forced deleveraging, resulting in over $1 billion in long liquidations at recent lows, which briefly breached intraday support before dip buyers stepped in. 

The options market has further intensified volatility, as dealers remain net short gamma around the $100,000 strike, leading to increased hedging activity near this critical level. 

The $100,000 mark now stands as a psychological barrier, and any stabilization in ETF flows could shift market sentiment, provided no new macroeconomic shocks occur.

On the macroeconomic front, the analysts assert that the current environment remains supportive, albeit clouded by the ongoing government shutdown in Washington. However, policy clarity remains elusive. 

The Federal Reserve’s recent 25 basis point cut in October, which included some dissenting opinions, was accompanied by a cautious tone that pushed back against expectations for another cut in December. 

Markets are currently pricing in a 60-65% chance of a follow-up move, but as the Fed’s blackout period continues, policymakers may become more comfortable with the idea of pausing, which would help maintain a firm dollar and tight credit conditions.

For Bitcoin to break higher sustainably, CryptoQuant’s analysis suggests that a reversal in exchange-traded fund outflows and renewed confidence in risk assets will likely be necessary. 

Featured image from DALL-E, chart from TradingView.com