Bitcoin Struggles at $68,000 as Demand Weakens Amid Macroeconomic Shifts
By John Nada·Feb 17, 2026·6 min read
Bitcoin's price struggles under weak demand and institutional outflows, despite declining volatility and favorable macroeconomic conditions.
Bitcoin remains under pressure, trading near $68,000, reflecting a broader lack of demand despite signs of diminishing panic in the market. According to CoinDesk, Bitcoin's 30-day implied volatility has decreased to an annualized 52%, indicating that investors are less frantic about price swings after an early-month surge that had seen volatility reach nearly 100% during a price crash to around $60,000.
The decline in volatility suggests a stabilization as fear recedes. Analysts at Bitfinex noted that the demand for options, which provide insurance against price movements, is no longer as aggressive, indicating a shift in market sentiment. Options are derivative contracts that allow traders to hedge against price swings, with call options profiting from upward moves and put options protecting against downward slides. The receding demand for these hedging instruments is a telling sign of changing investor psychology.
Historically, high implied volatility reflects heightened panic in the market, where investors are scrambling to protect their positions. The sharp drop from nearly 100% back down to 52% illustrates a significant easing of fears. Yet, despite this newfound stability, Bitcoin's price struggles to break above $70,000, signaling persistent weakness in demand among both retail and institutional investors.
Funding rates in Bitcoin perpetual futures remain just above zero, indicating a cautious outlook among traders. This metric, which represents the periodic payments exchanged between long and short traders, reveals that while traders lean slightly bullish, there is no appetite for aggressive re-leveraging. Analysts from Bitfinex explained that the derivatives markets support this view of stabilization rather than renewed buying. Positive funding rates typically suggest a bullish sentiment where buyers are betting on price rises, but the current rates reflect a more conservative approach, further illustrating the market's hesitancy.
Institutional interest also appears lackluster, with U.S.-listed spot Bitcoin exchange-traded funds (ETFs) facing significant outflows, amounting to nearly $678 million in February alone. This decline extends a worrying trend of redemptions over the past three months, reflecting a broader hesitance among institutional investors to commit capital in the current environment. The ETF market plays a crucial role in institutional asset allocation, and the outflows indicate a lack of confidence in Bitcoin's short-term prospects.
Despite these challenges, there is a glimmer of hope as macroeconomic conditions evolve. Lower U.S. inflation rates and decreasing real yields on Treasury notes could provide a boost to risk assets, including Bitcoin. Recent data showed that the consumer price index (CPI) slowed to 2.4% year-on-year in January from 2.7% in December, which strengthens hopes for potential interest rate cuts by the Federal Reserve. Analysts suggest that as real yields decline, the relative appeal of non-yielding assets like Bitcoin increases, especially if the dollar weakens.
The real or inflation-adjusted yield on the U.S. 10-year Treasury note fell to 1.8%, the lowest since December 1. A decline in real yield typically prompts investors to increase their exposure to assets like Bitcoin, as they seek alternative stores of value. Lower real yields reduce the relative carry disadvantage of non-yielding assets such as Bitcoin, making it more attractive to investors looking for growth in a low-yield environment. Furthermore, a softer dollar supports global liquidity conditions, which could enhance Bitcoin's appeal in international markets.
The interplay between macroeconomic factors and market sentiment continues to shape the cryptocurrency landscape. While demand indicators may currently suggest caution, the potential for macroeconomic shifts to favor Bitcoin could spark renewed interest from both retail and institutional investors. As inflation rates continue to trend downward and the Federal Reserve signals potential rate cuts, the environment for Bitcoin could become more favorable, reigniting the bullish sentiment that characterized previous market cycles.
However, the current landscape is complicated by the recent sell-off, which saw Bitcoin's price dip to nearly $60,000 before staging a recovery. This instability raises questions about the sustainability of any upward momentum, as the market grapples with both internal dynamics and external pressures. The early-month sell-off fizzled at $60,000 on February 6, but prices have since struggled to maintain a foothold above $70,000, underscoring the ongoing challenges for bulls in this market.
As traders navigate this complex environment, the cautious sentiment reflected in funding rates and ETF flows serves as a reminder of the prevailing uncertainties. For Bitcoin to reclaim its previous highs, it will likely need to see a more pronounced shift in demand, driven by both improved market conditions and renewed institutional interest. These factors will be crucial in determining whether Bitcoin can break through its current resistance levels and establish a more robust upward trajectory.
In addition to macroeconomic influences, market structure also plays a significant role in Bitcoin's price dynamics. The current market is characterized by a mixture of retail and institutional players, each with varying strategies and time horizons. Retail investors tend to react more impulsively to market fluctuations, while institutional investors typically take a longer-term view, often influenced by broader economic indicators and regulatory developments.
The balance between these two groups is vital for Bitcoin's future performance. If retail investors maintain their cautious approach, it could prolong the current stagnation in demand. Conversely, if institutional investors begin to re-enter the market, this could provide the necessary fuel for a significant price recovery. The potential for institutional players to step back into the arena is particularly intriguing, as they often bring with them substantial capital and a willingness to hold assets for extended periods.
Moreover, the ongoing discussions surrounding regulations and compliance in the cryptocurrency space add another layer of complexity. As governments worldwide grapple with how to regulate digital assets, the outcomes of these conversations will likely influence investor sentiment. Clear regulatory frameworks could either bolster confidence among institutional investors or create additional barriers to entry, depending on how they are structured.
While the current environment presents challenges, the underlying fundamentals for Bitcoin remain intact. As a decentralized digital currency, Bitcoin continues to garner interest as a hedge against inflation and economic uncertainty. Its finite supply and strong network effects make it an attractive option for those seeking an alternative to traditional financial systems.
Long-term holders and advocates of Bitcoin continue to believe in its potential to reshape the financial landscape, viewing current price pressures as temporary hurdles. The belief that Bitcoin can eventually break through the $70,000 barrier and reach new all-time highs drives many investors to hold their positions, despite short-term volatility.