Bitcoin experienced a significant downfall overnight, breaking below the critical $90,000 mark for the first time in three months. This descent came as sell pressure in the equities market intensified, pushing the cryptocurrency to a low of $87,736. Analysts warn that if Bitcoin continues to breach this level, it may face a further decline towards the $80,000 threshold. The broader crypto market is now on standby, awaiting its next major catalyst.
The $90,000 level had been a crucial support point for Bitcoin, marking the bottom of a narrow trading range since late November. However, Bitcoin's price fell 6% to $88,519, according to Coin Metrics, marking a nearly 20% drop from its all-time high reached on President Donald Trump's inauguration day. This downturn reflects increased uncertainty in the market as investors react to recent shifts in the political landscape.
"Equities have faced a few difficult sessions over the last week, with top-performing stocks down many times the index, as markets grapple with increased uncertainty under the new administration," said Steven Lubka, head of private clients and family offices at Swan Bitcoin.
Other cryptocurrencies also felt the impact of this market pressure. Ether and Solana's sol token both saw declines of 9%, while the broader crypto market, as measured by the CoinDesk 20 index, lost more than 8%. These moves indicate a broader trend of profit-taking and short-selling in the absence of clear short-term catalysts.
"This pressure has spilled over into bitcoin and crypto markets… Ultimately, the lack of visible short-term catalysts and pressure from equities creates an environment for profit-taking and pressure from shorts," Lubka added.
Bitcoin started the year on a positive note, buoyed by optimism around potential policy changes under the Trump administration. The President issued an executive order on cryptocurrency at the end of January, which was generally well-received by industry experts despite its cautious tone on establishing a strategic bitcoin reserve.
Despite the current market turbulence, some experts remain optimistic about Bitcoin's long-term prospects. Steven Lubka predicts that Bitcoin will overcome this current dip and resume its upward trajectory by mid-March. His insights suggest that while short-term volatility is expected, the fundamental outlook for Bitcoin remains strong.