Addressing the Elephant in the Room

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Every investor is in shock today, whether they are invested in equities, commodities or cryptocurrency. The entire market has suffered a violent meltdown. While headlines are dominated by Bitcoin being down double digits and officially in the red since Trump took office in late 2024, now even trading below the 2021 all time high, it is important to zoom out.

This is not a Bitcoin specific event. This is a macro driven market drawdown across all risk assets.

Bitcoin is down nearly 14% over the last 24 hours, rivalling its worst daily performance since the FTX collapse in 2022. Silver has fallen 20% in less than 24 hours, gold is currently down 6.6%, and major technology stocks have been crushed. Amazon dropped 14% in after hours trading, Microsoft fell 5%, and Strategy (MSTR) is down 17% in the last 24 hours, with many others experiencing double digit drawdowns.

This is a broad market liquidation.

Putting Bitcoin Into Historical Context

While this is an entire market collapse, not just Bitcoin, it is still worth revisiting historical Bitcoin cycle lows and the current setup. Over the past couple of months we have highlighted several on chain and fundamental metrics that are now either rivaling 2022 cycle lows or are sitting at levels even lower than four years ago.

The difference is price.

Source:https://www.tradingview.com/x/Ilrvlnjb/

Bitcoin is currently trading around $62k. In 2022, when these same metrics were flashing extreme fear and capitulation, Bitcoin was trading near $15k after peaking at $69k. Investors who accumulated during those cycle lows are still up over 4x today, even after the recent 50% correction.

Going further back, those who bought the COVID crash when Bitcoin fell to approximately $3.8k and dropped almost 50% in a 24 hour period are up more than 15x.

The message is consistent. Long term conviction combined with buying during periods of extreme pessimism has historically been rewarded. In 2022, many believed Bitcoin would fall below $12k. During COVID, there were widespread expectations of prices below $1k. Those risks were real, but so were the opportunities.

The investors who assessed risk versus reward and acted decisively are now sitting on generational positions. They accepted the possibility of further downside and focused instead on long term upside. Four to six years later, those decisions speak for themselves.

Bitcoin at $62k offers no guarantees that lower prices will not come. However, history shows that conviction is built during periods like this, not at euphoric highs. Bitcoin’s current all time high stands at $126k, which represents a move of over 100% from current levels. Many analysts had near term targets of $200k this cycle, which would be close to a 3.5x from here.

Strategy, Saylor and the Bitcoin Narrative

Current headlines are heavily focused on Michael Saylor and Strategy. As Bitcoin falls, Strategy’s average cost of roughly $76k leaves them significantly underwater, with unrealised losses now exceeding $10 billion. There is growing speculation around forced selling or liquidation risk.

It is critical to separate the entity from the asset.

Even if Strategy were forced to sell, the issue would be Strategy, not Bitcoin. No individual, company or fund is bigger than Bitcoin.

History supports this. We have seen Mt. Gox collapse in 2014 and FTX fail in 2022, both of which caused severe short term price damage. Yet neither impacted the Bitcoin network itself. Bitcoin continued to operate flawlessly while poorly managed or fraudulent entities collapsed around it.

Those entities used Bitcoin. They were not Bitcoin.

If a fraudulent business collapses while using US dollars, the blame is not placed on the dollar itself. The same logic applies here.

This is not a call suggesting Strategy will fail. It is simply a reminder that Bitcoin does not rely on any single participant to survive or succeed.

The Nature of Freedom Money

Bitcoin’s greatest strength is also its greatest responsibility. It allows individuals and institutions to use it however they choose. That includes storing value responsibly or leveraging it aggressively. When money is misused, it can distort public perception, but it does not change the underlying use case.

Bitcoin remains neutral, permissionless and resilient. That must remain front of mind, especially when noise is at its loudest.

Stormrake Spotlight: Pax Gold (PAXG) ($4,736)

Source:https://www.tradingview.com/x/flbWw0eB/

PAXG fell 6.6% over the last 24 hours and has now confirmed a lower high. Bulls faced a difficult task in attempting to set a higher high and ultimately failed. This does not yet signal full bearish control. A bearish takeover would only be confirmed if PAXG breaks below the recent higher low at $4,460.

BTC/USD Key Levels and Price Action:

Source:https://www.tradingview.com/x/a7oNMa3m/

Bitcoin has experienced its worst day since the FTX collapse in 2022, falling 14% over the last 24 hours. Price briefly traded down to the $60k region before seeing a strong reaction, already bouncing over 6% from the intraday low around 11:15am.

Bears remain firmly in control for now. The key question is when bulls step back in with conviction. The reaction from $60k suggests this level is acting as a short term fight zone and potential bounce area.

BTC Total ETF Flows for 5 Feb: (data not available at the time of writing)

(ETF flow data is sourced from https://farside.co.uk/btc/ and reflects figures at the time of writing.)

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*All prices are denominated in USD unless stated otherwise*

Written by Alexandar Artis and James Ryan

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