Bitcoin’s price has been steadily declining in recent days, despite growing enthusiasm among retail traders who continue to buy the dip. This has created a strong contrarian market dynamic, where prices are moving in the opposite direction of retail expectations. The ongoing downtrend, paired with rising liquidations, suggests increased volatility and raises questions about when Bitcoin’s bearish momentum will shift.

Retail Sentiment and Buying Activity: A Contrarian Trend

In the face of Bitcoin’s price decline, retail traders have remained highly optimistic. Data on social sentiment shows a surge in “buying the dip” mentions across various platforms, reflecting the persistence of retail interest. However, despite this heightened buying activity, Bitcoin’s price continues to slide, defying the typical market reaction to such sentiment.

Historically, price bottoms are often marked when retail traders begin to lose interest or grow less confident, but the current situation is different. Retail traders are holding onto their belief that prices will soon bounce back, even as Bitcoin’s value continues to fall. This overconfidence is a key feature of the current market, suggesting that the prevailing dip-buying sentiment may be misplaced in the short term.

Liquidations and Increased Market Pressure

A significant factor contributing to Bitcoin’s price decline has been the rise in liquidations among leveraged traders. The market’s downward movement has triggered substantial liquidations, which are pushing Bitcoin prices even lower. On February 25, 2025, Bitcoin saw its highest long liquidation in five months, amounting to approximately $559 million. This was followed by a second wave of liquidations on February 26, totaling $391 million in long positions.

The liquidation heatmap paints a concerning picture, with long liquidations far outweighing short liquidations. This cascading effect is exacerbating the downward pressure on Bitcoin’s price, as traders are forced to close their positions, which only further fuels the sell-off. With liquidations continuing to mount, Bitcoin’s price remains susceptible to additional losses as traders who were once betting on upward price movement are now forced to cut their losses.

Bitcoin’s Price Action and Key Levels

At the time of writing, Bitcoin is trading around $85,855, marking a substantial drop from its previous highs. The price has fallen below the critical $90,000 level, which was previously considered an important psychological barrier. If Bitcoin continues its downward trend, the next potential support level lies around $83,000, where previous buying activity was observed.

Technical indicators are also pointing to continued weakness in the market. The Moving Average Convergence Divergence (MACD) shows bearish momentum, signaling that Bitcoin may not be ready for a reversal just yet. Additionally, both the 50-day and 200-day moving averages indicate that the current trend is still leaning bearish, further confirming the absence of strong support.

What Lies Ahead for Bitcoin?

For Bitcoin to stage a successful reversal, retail sentiment must cool down, allowing the market to reset. The current market structure, characterized by overconfidence among retail traders and continued liquidations, suggests that Bitcoin may need more time to find its footing. If the dip-buying pressure from retail traders starts to subside, a potential short-term relief rally could emerge, but this remains uncertain.

Given the volatility in the market and the persistence of bearish technical indicators, Bitcoin may face further downside before a meaningful recovery occurs. Traders should closely monitor liquidation levels, as well as shifts in market sentiment, to assess when a potential reversal could take place.

Until then, Bitcoin’s price remains vulnerable to continued declines, with the market waiting for a clearer signal that the downtrend is nearing its end.