Bitcoin price continued to struggle after losing the $90,000 support level over the weekend.
On Monday, upside price action was capped due to macro uncertainty, preventing bulls from reclaiming this key area.
Despite a shaky market sentiment, the total crypto market saw a modest 24-hour gain, pushing its valuation back above the $3.1 trillion mark.
This slight recovery was partly attributed to an increase in the circulating supply of cryptocurrencies, especially stablecoins.
Market sentiment, as measured by the Crypto Fear and Greed Index, worsened significantly, falling nearly 5 points to 16 and sinking deeper into the “extreme fear” range.
In line with the broader downturn, Altcoins showed little activity. Most top tokens were in the red, with only a few select tokens managing to buck the trend based on specific project catalysts.
Why is the Bitcoin price down?
Bitcoin price dropped below the important $90,000 support level as the recent rebound faded and investors embraced a risk-off sentiment.
Much of the selling pressure appears to be rooted in a confluence of macroeconomic anxiety and fading demand from institutional vehicles like ETFs.
Data from CoinGlass shows that $409 million in crypto positions were liquidated over the past 24 hours alone, with long traders bearing the brunt at $325.89 million.
Bitcoin led the wipeout with $110 million in liquidations, followed closely by Ethereum at $102 million.
Macroeconomic uncertainty is a significant contributor to the downturn.
The upcoming Bank of Japan (BoJ) meeting later this week has created significant uncertainty, with economists anticipating a 0.25% interest rate hike.
A BoJ rate hike is impactful due to its global influence and the divergence it creates with the Federal Reserve, which is currently cutting rates.
This divergence could trigger a rotation back to Japanese bonds and accelerate the unwinding of the long-standing carry trade.
Meanwhile, uncertainty surrounding future Fed policy has compounded the unease.
Despite a recent 25 basis point cut, hawkish commentary from officials and a lack of consensus over the next moves have left markets jittery.
Thin December liquidity only worsened the effect.
Concerns are also mounting around corporate Bitcoin holders.
Strategy Inc., which has famously accumulated large BTC reserves, briefly floated the idea of selling part of its holdings to cover dividend payouts before walking that back and clarifying it had ample cash reserves.
Still, the episode has raised fears that other companies that followed Strategy’s blueprint might start trimming their positions, particularly if balance sheets tighten or dividends become unsustainable.
That threat of forced selling continues to cast a shadow.
Further pressuring sentiment is the waning demand from Bitcoin ETFs.
These vehicles experienced over $3.48 billion in outflows last month, marking the heaviest monthly exodus since February.
While there has been a modest $348 million inflow so far this month, it hasn’t been strong enough to flip the narrative, especially as the broader market turns cautious.
Will Bitcoin price crash?
Market pundits are now eyeing key support areas, reclaiming which would be essential to prevent further downside in the upcoming sessions, especially if the macro environment worsens.
Over the short term, Bitcoin bulls must quickly reclaim the $90,000 support area, which has become a key psychological level after being tested multiple times over the past few weeks.
Without a swift recovery, this area is now likely to act as resistance, potentially capping any rebound attempts unless broader macro conditions improve.
If Bitcoin fails to regain footing above $90,000 soon, price action may remain trapped within the lower band of $84,000 to $87,000, where the 24-hour liquidation heatmap from CoinGlass shows a dense concentration of liquidated long positions. (See below.)
A second resistance zone sits around $92,000 to $93,000, where another batch of long liquidations occurred earlier.
If Bitcoin does manage to rally beyond $90,000, this area could stall the move unless broader sentiment improves or a strong catalyst appears.
On the downside, the most immediate support seems to be forming around $83,000 to $84,000.
This is where the selling finally slowed after a wave of liquidations swept through from $87,000 downward.
If Bitcoin holds here, some stability may return. But if this level breaks, the next support zone is likely lower, closer to the $81,000 to $82,000 range.
In the short term, Bitcoin may trade sideways between $84,000 and $90,000, with traders watching for any signs of strength or weakness around those levels.
On X, Crypto trader, analyst and entrepreneur Michaël van de Poppe, in line with the aforementioned analysis, drew attention to the importance of the $90k level, while sharing a BTC/USD 4-hour price chart. (See below.)
“If that $90K area breaks, I think we’ll see some fast moves to $92-94K, which increases the chances of a quick breakout to $100K. However, if this $90K still holds up as resistance, there’s a chance we’ll go substantially lower,” the analyst wrote.
Some optimism came from pseudonymous analyst Gordon, who believes the current downturn is part of a brief correction, and expects the Bitcoin price to return to $100k by the end of the year, basing his analysis on historical price trends.
At press time, Bitcoin price was trading just above $87,000 after dropping over 2% in the past 24 hours.
Top altcoin gainers for the day
The altcoin market cap rose from $1.33 trillion to an intraday high of $1.37 trillion earlier today before settling at $1.35 trillion, up 1.5% over the day.
Ethereum (ETH), the largest altcoin by market cap, rose a little on the day to $3,171 before facing a sharp drop, moving below $3,000, down 2.7% over the daily session.
Other large-cap altcoins such as BNB (BNB), XRP (XRP), Solana (SOL), Dogecoin (DOGE), and Cardano (ADA) also witnessed losses between 3-4%.
Only three altcoins managed to buck the broader market downturn. Audiera (BEAT) led the pack, surging nearly 100%, a move largely attributed to its recent futures listings on top centralized exchanges such as Binance, KuCoin, and OKX.
These listings triggered a spike in derivatives trading volume, which reportedly crossed $6 billion across platforms, fueling heightened interest and speculative momentum surrounding the token.
MYX Finance (MYX) and Merlin Chain (MERL) followed with more modest gains of 10.7% and nearly 3%, respectively.
Source: CoinMarketCap
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