Bitcoin (BTC) has recently dipped below the $100,000 support level, falling nearly 4% on Monday after reaching a record high of $109,588 just days earlier. This sharp reversal has sparked widespread concern among investors and traders, triggering over $860 million in liquidations across the crypto market in the past 24 hours—nearly $260 million of which were tied directly to Bitcoin. As momentum indicators flash bearish signals, many are asking: Why is BTC crashing? And more importantly—what comes next?
Bitcoin Fails to Sustain All-Time High Momentum
After soaring to an unprecedented $109,588 on January 20, Bitcoin struggled to maintain upward momentum. The rally, fueled by spot ETF approvals and growing institutional adoption, began to stall by Saturday, leading to a gradual pullback that accelerated into Monday’s drop below $99,000.
This correction wasn’t isolated—it triggered a domino effect across leveraged positions in the derivatives market. According to CoinGlass, total crypto liquidations hit $860.55 million in one day, with Bitcoin accounting for a significant share. Such large-scale liquidations often amplify downward pressure as automated margin calls force the sale of holdings.
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On-Chain Data Reveals Profit-Taking Surge
Santiment’s Network Realized Profit/Loss (NPL) metric offers insight into investor behavior during price peaks. The NPL measures the net profit or loss realized across the network based on on-chain transaction data. A spike indicates widespread profit-taking, which typically precedes price corrections.
In this case, Bitcoin’s NPL surged from 1.55 billion to 4.82 billion between January 21 and January 23—mirroring a similar spike seen in mid-December. Historically, such spikes have been followed by double-digit percentage declines within days. If past patterns hold, a drop of up to 14% could be on the horizon.
Additionally, Coinglass data shows Bitcoin’s long-to-short ratio has fallen to 0.89—the lowest in over a month. A ratio below 1 means more traders are betting on price declines than gains, reflecting growing bearish sentiment.
Macro Factors: Fed Decision Looms Over Crypto Markets
While internal market dynamics play a role, external macroeconomic forces are also weighing on Bitcoin’s performance. This week’s U.S. Federal Reserve interest rate decision has put risky assets like cryptocurrencies under pressure.
Ipek Ozkardeskaya, Senior Analyst at Swissquote Bank Ltd., noted that although the Fed is likely to hold rates steady, rising inflation pressures could delay future cuts. Recent data suggests Q4 U.S. GDP growth may have reached 2.7%, with inflation creeping up from 1.9% to 2.5%. Strong economic fundamentals reduce the likelihood of accommodative monetary policy—bad news for assets like Bitcoin that thrive in low-rate environments.
Moreover, political uncertainty adds another layer of complexity. President Donald Trump’s public calls for rate cuts have created tension with the Fed, raising concerns about central bank independence. As Kathleen Brooks, Research Director at XTB UK, pointed out, “The main event isn’t just what the Fed does—it’s how Trump reacts.”
A hawkish Fed stance strengthens the U.S. dollar and Treasury yields, making non-yielding assets like Bitcoin less attractive by comparison.
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Technical Outlook: Can Bitcoin Hold $90,000?
From a technical perspective, Bitcoin’s short-term outlook appears increasingly bearish. The price has broken below the psychologically critical $100,000 support level. If this level fails to hold on a daily closing basis, the next major support zone lies around $90,000.
Key indicators confirm weakening momentum:
- The Relative Strength Index (RSI) on the daily chart sits at 47—just below the neutral 50 threshold—indicating growing bearish control.
- The MACD (Moving Average Convergence Divergence) is nearing a bearish crossover. A confirmed flip would signal further downside momentum and potentially lock in a downtrend.
However, there remains a bullish scenario: if buyers step in to defend the $100,000 level and push prices back above it, Bitcoin could retest its all-time high of $109,588 in the coming weeks.
Key Levels to Watch
- Support: $90,000 (next major floor)
- Resistance: $100,000 (former support), $109,588 (ATH)
- Critical Signal: Daily close above or below $100,000
Market structure suggests this pullback may be healthy—a necessary correction after an aggressive rally. Volatility is inherent in mature bull runs, and seasoned investors often view such dips as accumulation opportunities.
Frequently Asked Questions (FAQs)
Q: Why did Bitcoin crash after hitting $109,588?
A: The drop followed massive profit-taking and leveraged long liquidations after reaching a new all-time high. On-chain data shows investors cashed in gains, increasing selling pressure.
Q: How much was liquidated during the Bitcoin price drop?
A: Over $860 million in total crypto positions were liquidated in 24 hours, with nearly $260 million attributed to Bitcoin alone.
Q: What does the long-to-short ratio tell us about market sentiment?
A: With BTC’s long-to-short ratio at 0.89, more traders are betting on price declines than increases—indicating bearish sentiment.
Q: Could macroeconomic factors affect Bitcoin’s price?
A: Yes. The upcoming Fed interest rate decision influences risk appetite. A strong economy and potential inflation may delay rate cuts, making Bitcoin less attractive versus yield-bearing assets.
Q: What technical indicators suggest a further decline?
A: RSI below 50 and an impending bearish MACD crossover both point to weakening momentum and possible continuation of the downtrend.
Q: Is this crash a buying opportunity?
A: Many analysts view sharp corrections in strong bull markets as healthy. If fundamentals remain intact—such as ETF inflows and adoption growth—dips may present strategic entry points.
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Conclusion
Bitcoin’s recent dip below $100,000 reflects a confluence of technical exhaustion, profit-taking, and macroeconomic uncertainty. While the $860 million liquidation wave underscores short-term fragility in leveraged markets, long-term drivers—including institutional adoption and limited supply—remain intact.
Traders should monitor key levels closely: a daily close below $100,000 opens the door to $90,000, while a recovery above that level could reignite bullish momentum toward new highs.
As always in crypto, volatility is not a flaw—it’s a feature. Staying informed, managing risk, and understanding market cycles are essential for navigating these dynamic conditions.
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