BTC Deep Dive: From the $68K Bottom to a Comprehensive Risk Warning Analysis

Bitcoin, after experiencing a sharp correction, is undergoing a deep market cleansing. According to the latest data, BTC is currently priced at $68,940, with a 24-hour change of +3.60%. This rebound occurs at a critical moment where multiple pressures converge. Moreover, renowned investor Michael Burry’s systematic warning reveals the underlying risks behind this decline.

Michael Burry’s Death Spiral Warning: Systemic Risks for Corporate Holders

Last week, Michael Burry issued a cautionary view, asserting that there are fatal flaws in the narrative of Bitcoin as an investment asset. Burry pointed out that when gold and silver strengthen due to expectations of dollar depreciation, Bitcoin fails to follow — directly challenging its role as a “store of value.”

More critically, Burry expressed concerns about corporate balance sheets. He warned that if Bitcoin drops another 10%, MicroStrategy, the world’s largest corporate BTC holder, could face severe difficulties, including limited financing options. His “death spiral” theory depicts a domino effect: forced liquidations by corporate holders trigger chain reactions of selling, attracting more weak hands to exit, ultimately creating a self-reinforcing downward cycle.

Historically, BTC has fallen 40% from its October high last year, validating the concerns of skeptics regarding corporate-level investment strategies. When institutional funds come under pressure, systemic risks shift from theory to tangible threat.

Continuous Outflows of Spot Funds: How Far Is the Market Bottom?

According to on-chain data from Coinglass, as of February 4, spot exchanges saw outflows totaling $54.45 million — marking two consecutive weeks of net outflows. The data series shows no meaningful accumulation days from late January to early February, only persistent distribution pressure.

This outflow pattern itself is a warning sign. When prices decline alongside spot outflows, it indicates not bottom-fishing by buyers but rather gradual liquidation by holders. The market lacks effective buy-side support, meaning if Burry’s risk warnings materialize, spot selling pressure could accelerate significantly. The key question remains: where will genuine demand emerge?

Technical Outlook: Deepening Difficulties with RSI Oversold and EMA Clusters

On the daily chart, Bitcoin is confined within a clear descending channel — a structure established since October last year that continues to suppress gains. Four moving averages form a dense cluster exerting ongoing pressure: the 20-day MA at $84,468, the 50-day MA at $88,280, the 100-day MA at $92,655, and the 200-day MA at $97,132.

The Relative Strength Index (RSI) has fallen to 28.75, the first deep oversold reading since the November 2024 correction. While extreme oversold signals often precede rebounds, this technical “cheapness” must be supported by price action and market fundamentals to translate into a genuine reversal. Extreme indicator readings alone do not guarantee trend changes.

Since October, the downward trend line has continuously constrained upward attempts, with the price forming progressively lower highs and lower lows. The key technical support level is around $65,000. If the mid-term defense at $74,000 fails, the next target is the demand zone at $65,000.

Short-term Volatility and Bollinger Bands: Rebound or Further Decline?

The 4-hour chart shows Bitcoin briefly breaking below the lower Bollinger Band (at $74,743), then recovering to around $76,650. The 20-period simple moving average (SMA) sits at $77,435, acting as immediate resistance for any recovery attempt.

The Supertrend indicator remains bearish, with a stop-loss set at $78,137, further confirming the dominant short-term downtrend. The upper Bollinger Band at $80,126 is the first hurdle for a potential reversal — bulls need to close above this level to signal a momentum shift.

Currently, the rebound should be viewed as a technical relief within a downtrend rather than a genuine trend reversal. Without clear fundamental or capital support, these rebounds are merely pauses in the broader decline.

Outlook and Sentiment: Bulls vs. Bears

The critical pivot in the current pattern is the $84,468 level, corresponding to the 20-day moving average.

Bullish scenario: A daily close above this level would reclaim the major moving averages suppressed by the descending channel and send a stabilizing signal to the market — suggesting that the $75,000 zone could serve as an effective bottom. This development depends on improved corporate sentiment and a reversal of spot outflows, which, while less probable, is not impossible.

Bearish scenario: A daily close below $74,000 would confirm Burry’s “death spiral” unfolding, with the target set at the $65,000 supply zone. Given ongoing pressure on corporate balance sheets and persistent spot outflows, this downside scenario appears more plausible.

Bitcoin’s current movements are not just about price; they reflect a deeper process involving corporate holding strategies, market sentiment, and technical structures. The outcome of this process will determine the future direction of the market.