Bitcoin sinks below $90K: Collapse, reset, or buying window?

Bitcoin’s drop below the $90,000 level is not a collapse, but it is more than routine volatility, according to reports. The move reflects a macro-driven reset, where risk appetite has waned, and leverage has been unwound, rather than a breakdown in long-term demand. Prices slid into the mid-$85,000 range over the weekend, while more than $400 million in crypto positions were liquidated in a single day, according to CoinGlass data.

Sentiment has deteriorated sharply. The Crypto Fear and Greed Index plunged to as low as 16, firmly in “extreme fear” territory, even as total crypto market capitalisation recovered above $3.1 trillion. 

That combination - deep pessimism without signs of capitulation - suggests the market is searching for a base analysts noted. Whether this phase becomes a buying window now depends less on crypto-specific narratives and more on global monetary policy signals.

What’s driving bitcoin’s slide?

Market watchers expressed that Bitcoin’s failure to reclaim $90,000 has been shaped by a clear shift towards risk aversion. The recent rebound lost momentum as macroeconomic uncertainty resurfaced, prompting traders to reduce their exposure. CoinGlass data shows $201.52 million in crypto positions were liquidated in the past 24 hours alone, with long positions accounting for $100.29 million. 

Macroeconomic uncertainty has been the dominant catalyst. Attention has turned to the Bank of Japan, where economists widely expect a 0.25% interest-rate hike at this week’s policy meeting. Such a move would deepen the divergence with the US Federal Reserve, which has already begun cutting rates. That divergence risks accelerating the unwinding of yen-funded carry trades that have supported global risk assets, including cryptocurrencies. Thin December liquidity magnified the impact, allowing modest selling to push prices sharply lower.

Why it matters for market sentiment

The significance of bitcoin’s pullback lies in the message sent by sentiment indicators rather than the price level itself. A Fear and Greed Index reading deep in extreme fear signals that investors are prioritising capital preservation over upside participation. Historically, similar readings have often aligned with local market bottoms; however, they have also persisted during periods of prolonged macroeconomic stress.

Institutional behaviour has added to the caution, according to analysts. Bitcoin exchange-traded funds recorded more than $3.48 billion in net outflows last month, marking their heaviest monthly exodus since February. While inflows have returned modestly this month, they have not been strong enough to reverse the narrative. As one digital asset strategist told Reuters, “When ETF demand stalls, bitcoin becomes far more sensitive to macro shocks”.

Impact on the broader crypto market

The wider crypto market has mirrored bitcoin’s weakness without showing signs of outright capitulation. Analysts note that most major altcoins have remained subdued, with many posting double-digit monthly losses and showing little reaction to bitcoin’s modest rebound. Bitcoin dominance has climbed towards 57%, highlighting a defensive rotation within the digital asset complex rather than renewed appetite for speculative risk.

At the same time, activity remains elevated. Bitcoin’s 24-hour trading volume has surged by more than 70% to around $51 billion, suggesting active repositioning rather than abandonment. Technical indicators reflect this tension. 

Expert outlook: collapse, reset, or buying window?

Most analysts describe the current phase as a reset rather than a collapse. The sell-off has been driven by leverage unwinds, policy uncertainty, and positioning adjustments, rather than structural damage to Bitcoin’s adoption story. 

Corporate concerns have unsettled sentiment, particularly after headlines suggested large bitcoin-holding firms briefly considered asset sales to manage dividends. Although those fears were later eased, the episode highlighted how balance-sheet pressure could become a risk if economic conditions tighten.

Whether this reset becomes a buying window depends on upcoming signals. A Bank of Japan rate hike could extend risk-off pressure if carry trades unwind aggressively, while further ambiguity from the Federal Reserve would keep markets cautious. On the other hand, stabilising ETF flows and improving liquidity could quickly shift sentiment. For now, Bitcoin appears to be trapped in a consolidation range, with the downside driven more by macroeconomic nerves than a loss of conviction.

Key takeaway

Bitcoin’s drop below $90,000 is best viewed as a macro-driven reset, not a collapse. Extreme fear, ETF outflows, and central-bank uncertainty have suppressed risk appetite, even as trading activity remains high. Historically, such conditions can lay the groundwork for opportunity, but timing remains uncertain. The next moves in monetary policy and institutional flows will determine whether this phase becomes a genuine buying window.

Bitcoin technical insights

From a technical perspective, Bitcoin remains locked in a corrective consolidation following its sharp pullback from the US$114,000 highs. Price action is hovering just above the US$84,700 support zone, a level increasingly viewed by traders as a near-term line in the sand. A decisive break below this area could expose the market to another wave of liquidation-driven selling, particularly given the still-elevated use of leverage across derivatives markets.

Momentum indicators point to caution rather than capitulation. The Relative Strength Index is edging higher but remains below the 50 midline, suggesting bearish pressure is easing without yet confirming a trend reversal. The MACD remains in negative territory, although its histogram is gradually improving, indicating that downside momentum is slowing. Traders monitoring these levels on platforms such as Deriv MT5 are increasingly focused on how price behaves around support, while tools like the Deriv Trading Calculator are being used to assess margin exposure and potential risk if volatility accelerates.

On the upside, recovery attempts remain capped by resistance near US$94,600, followed by a more significant ceiling around US$106,600. Until one of these levels is convincingly breached, bitcoin is likely to remain range-bound, with technical traders waiting for a clearer catalyst before committing to a directional move.

‍