Bitcoin set for second-worst February on record, Coinbase cites lack of positive catalysts

Bitcoin is on track to close February with a 21% decline, marking its second-worst February in history. The only time the digital asset performed worse was in February 2014, when it lost 30% amid the fallout from the Mt. Gox hack.

Currently hovering just above the $80,000 mark after briefly dipping below $79,000 in the past 24 hours, bitcoin’s recent price correction has been in part attributed to a lack of positive catalysts to drive investment conviction, according to analysts at Coinbase.

“In our view, the downturn has been driven by the absence of positive near-term catalysts for the space, compounded by the lack of technical support between the $80,000 and $95,000 levels,” Coinbase analysts David Han and David Duong said in a report on Friday.

While bitcoin has dropped over 21% this month, global equities have shown resilience, bolstered by continued momentum in the AI sector. Nvidia’s better-than-expected 4Q24 earnings report on Feb. 26 underscored this trend. Meanwhile, gold has maintained its strength, supported by ongoing central bank purchases.

Macroeconomic factors weighing on sentiment

The Coinbase analysts highlighted weaker macro sentiment in the U.S., citing a 10% month-over-month decline in the University of Michigan Consumer Sentiment Index and a 7% drop in The Conference Board’s Consumer Confidence Index. These indicators have amplified fears of an economic slowdown, weighing on risk assets, including cryptocurrencies.

According to Han and Duong, institutional flows have mirrored the cautious market mood. Over the past week, more than $2.9 billion has been withdrawn from U.S. spot bitcoin ETFs . Simultaneously, lending markets have echoed the risk-off sentiment as leverage diminished and funding rates declined across the board.

They also said that there was nearly $2 billion in perpetual futures liquidations at the start of the week, which has significantly reduced leverage in the system. Additionally, the analysts pointed to the CME basis rates for bitcoin and ether having dropped to 5%, with bitcoin's CME basis hitting its lowest level since March 2023.