The cryptocurrency market entered February cautiously, shaped by a combination of regulatory uncertainty in the United States and unstable price action in Bitcoin (BTC), which has struggled to sustain any meaningful rebound following the sell-offs in late January.
On the regulatory front, expectations surrounding the long-awaited U.S. Crypto CLARITY Act have softened. Despite high-level engagements, including a White House-hosted meeting with major banks and crypto stakeholders, the bill remains stalled in Congress, with lawmakers failing to agree on critical issues such as stablecoin yield rules and the scope of oversight between traditional financial institutions and crypto firms. Discussions at Senate have also failed to translate into legislative momentum, reinforcing concerns that the bill may not reach the floor in the near term. While the removal of a controversial amendment targeting credit-card fees improved negotiations marginally, there is no final text ready for voting.
The regulatory impasse has fed directly into market sentiment. Analysts agree that while regulatory clarity could serve as a long-term structural catalyst, its absence continues to weigh on short-term confidence, particularly among institutional investors who remain sensitive to policy risk.
The market entered February with a heavy bearish tilt.
Bitcoin (BTC): witnessed volatility without direction as BTC’s price action during the period reflected uncertainty. After trading close to $88,000–$89,000 in late January, BTC experienced a sharp sell-off, dipping into the mid-$70,000 range, before staging brief rebounds that lacked sustained momentum. In one notable overnight session, BTC fell below $80,000, only to recover approximately 3% within minutes, a move widely attributed to short covering rather than renewed demand.
By February 4, BTC was trading roughly 14–15% lower than its late-January levels, stabilised near the $76,000–$80,000 zone, consolidating but still well below previous highs and showing limited technical strength.
Ethereum (ETH): ETH saw even sharper volatility. Two major “whales” (BitcoinOG and Trend Research) offloaded over $370 million in ETH to repay Aave debts, signalling a strategic reduction in leverage. Prices plummeted toward the $2,200 – $2,300 range, with analysts labelling the recent minor bounce a “dead-cat bounce.”
The central debate among traders is whether BTC’s recent rebound qualifies as a “dead-cat bounce,” a temporary recovery after a sharp decline that fails to evolve into a sustainable trend. Supporting this trend are indicators such as the fact that the rebound had occurred in the absence of strong ETF inflows, macroeconomic tailwinds, and positive regulatory breakthroughs, suggesting that price movements are largely driven by short-term positioning rather than structural demand.
However, the market has not yet confirmed a deeper breakdown. BTC has managed to defend key support levels around the mid-$70,000 region, and technical strengthening at these levels could still form the base for a broader recovery, provided external conditions improve.
BTC is currently in a “show-me” phase after dropping nearly 16% in a week, trading around $73,000 – $75,000 following repeated rejections at the $88,000 – $90,000 zone, with key support at $74,000, then $68,000 – $70,000, and major structural support at $63,000, while resistance remains firm at $80,000 and the 100-week moving average near $88,000, suggesting a neutral-bearish outlook and likely consolidation between $70k and $80k unless where a high-volume breakout occurs. We envisage BTC touching $72k; although, ETH has underperformed with a sharper 26% decline, hovering around $2,100 – $2,300, facing critical support at $2,150 and $2,000, with downside risk toward $1,750, and strong resistance at $2,500 – $2,700 and $3,000, pointing to a fragile, bearish setup where any near-term bounce is likely a dead-cat rally rather than a sustainable recovery.
Overall, the period highlights a crypto market in strategic pause mode. Regulatory uncertainty, particularly the ongoing delay of the CLARITY Act, remains a major psychological and structural headwind. At the same time, BTC’s price behaviour reflects a market caught between speculative resilience and macro caution.
Until clear legislative progress or renewed institutional inflows emerge, BTC’s rebounds are likely to remain fragile, with the risk that recent price recoveries prove to be temporary relief rallies rather than genuine trend reversals.
In the near term, the macroeconomic data release, such as the U.S. Non-Farm Payrolls and Unemployment data due Feb 6, and the upcoming MicroStrategy (Strategy) Q4 earnings report, would act as a barometer for institutional BTC sentiment.
By: Sandra A. Aghaizu
February opened like a cold trading floor…
liquidity thinned, risk appetite froze, and prices slipped on a weak footing.
Bitcoin staggered lower, held up briefly by short covers, not conviction,
while Ethereum shed leverage like excess weight.
