On Monday, Bitcoin went under $90,000 for the first time in seven months as a 24-hour sell-off was blamed on a fragile market, institutional repositioning, and profit-taking in a report by The Block. Over the past 24 hours, bitcoin’s price dropped by 5.55%, going from $94,865 to a new low of $89,650, and then recovering slightly to $89,990, based on the data from The Block. The analysts included that the action is a substantial “psychological breakdown” for traders and agreed that the trading volume was exceedingly low outside of institutional outflows and liquidity pressure.
Rachael Lucas, crypto analyst at BTC Markets, noted that the troubled area is mostly driven by institutional behavior, where US spot bitcoin ETFs are pushing more than $3 billion in net outflows in the last three weeks. She also said that institutional investors were moving to risk-off positions before the year-end, thus resulting in more downward momentum.
Besides the fall, the world is also facing a shortfall in macroeconomic liquidity caused by the US government shutdown, which has left the Treasury General Account elevated and is thus limiting government spending. Several market experts have said that the liquidity gap has been a drag on risk assets generally, including crypto markets. Investors who had regarded $90,000 as a crucial psychological level during the times of high volatility were among those most affected.
Vincent Liu, CIO of Kronos Research, commented that short-term traders have escalated the sell-off by short-term traders, which, but long-term holders have still kept intact. Besides, he mentioned that macroeconomic rotation and leveraged unwinding are still going on at the same time, which is thinning the liquidity and thus exerting more pressure on spot prices. Liu reiterated that bitcoin’s long-term story is still valid but admitted that short-term high-frequency traders, funds, and speculative players are limiting the market.
Several price levels are turning into a focus for the analysts. Liu saw the range from $85,000 to $87,000 as immediate support, and a move back above $90,000 was required to bring short-term confidence back. Lucas identified $85,000 as a substantial support area and indicated $80,000 as a very important point below which, if the downward trend continues, it would open a way to the February lows of approximately $74,000 again. The market mood is still very subdued as shown by the Fear and Greed Index score of 11, and the uncertainty before the Federal Reserve’s December policy meeting is still putting pressure on traders.
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