Bitcoin Falls Below $79,000 as Inflation Shock Triggers Crypto Selloff; BTC Faces $71K Support

Bitcoin and the broader cryptocurrency market have faced sustained pressure from macroeconomic headwinds as inflationThe rate at which prices rise across an economy. concerns and rising interest rates weigh on risk appetite. BTC dropped below 79,000 on Friday, a decline of 3.18 percent, as equity markets sold off sharply amid spiking Treasury yields and hotter-than-expected inflation data. Ethereum fell alongside, with ETH closing below the critical 2,200 level and putting the market under pressure. The Fear and Greed Index collapsed to 34, indicating that sentiment has shifted from neutral to fear territory.

Liquidations in leveraged long positions have accelerated the decline. Data shows approximately 274 million dollars in Bitcoin long positions were liquidated in a matter of hours on Friday as stop-losses were triggered and margin calls forced capitulation. The liquidation cascadeSelf-reinforcing chain of forced liquidations: each liquidation moves price further, triggering more liquidations. The structural cause of crypto's flash crashes. is a typical feature of volatile crypto markets, where leveraged traders are forced to unwind bets when prices move sharply. This dynamic has created downside momentumThe empirical fact that winners keep winning over the medium term. that could extend to key technical levels around 71,000 to 65,000, where major liquidity clusters sit.

Yet the longer-term narrative remains constructive. On-chain metrics show Bitcoin's network growth rebounding and approaching a bullish inflection zone. The MVRV Z-Score (market value realized value) sits around 1.0, well below levels seen at prior cycle tops, suggesting the market is structurally nowhere near capitulation. Long-term holder supply in loss has risen to near-historic highs from 2015, 2018, and 2020, typically indicating that large holders are at their pain threshold but not yet surrendering.

The macro backdrop is the key variable. If Treasury yields stabilize and inflationThe rate at which prices rise across an economy. fears recede, the technical setup for a recovery could be in place. Bitcoin's recent performance has decoupled from gold (up 20 percent while gold fell 11 percent since geopolitical tensions escalated), suggesting that investors view BTC as a superior inflation hedge. However, if yields continue to rise and the Fed signals higher-for-longer policy, crypto could face further headwinds. The 78,000 to 79,000 zone remains a key short-term level to watch.