Bitcoin plunged below the $88,000 mark on January 20, continuing its downward slide to $87,856 by January 26. The cryptocurrency market took a beating as a broader stock market decline triggered a massive sell-off. Not pretty.
Risk-off sentiment cascaded through the markets, forcing liquidations totaling a staggering $929.66 million in a single day. Ouch. Long positions bore the brunt of the bloodbath, accounting for $822 million of forced closures. Another $744.06 million in market liquidations occurred over a 24-hour period leading into the week. The damage was widespread and brutal.
Market panic triggered nearly $930 million in liquidations, with longs taking an $822 million beating. Pure devastation across the board.
Japan emerged as ground zero for this market chaos. Traders dubbed it “Japanic” – clever, right? Japanese government bonds experienced their sharpest sell-off since 2022, with 10-year yields jumping 19 basis points in just two days. The upcoming February 8 snap elections loom large over market direction, with the Bank of Japan potentially returning to quantitative easing depending on the outcome.
The carnage wasn’t limited to Bitcoin. Ethereum dropped 4.4% to $2,973, BNB fell 4%, XRP declined 1.7%, and Solana decreased 2.6%. Even meme coins got hammered, with the sector’s market cap shrinking 2.9% to $43.2 billion. Unlike Bitcoin with its market dominance of approximately 62.7%, altcoins typically experience higher volatility during market downturns.
Institutional investors headed for the exits too. Bitcoin ETFs reported $103.6 million in net outflows on Friday, while Ethereum ETFs saw $41.7 million walk out the door. The sell-off coincided with US stock market indices experiencing their worst session since October. Nobody wanted to stick around for this party.
Technical analysts identified $87,000-$88,000 as critical support. If these levels don’t hold, Bitcoin could tumble to $85,000 or worse. Veteran trader Peter Brandt even spotted a “death cross” pattern, suggesting a potential drop to $58,000. Yeah, that bad.
Not everyone’s bearish though. Michael van de Poppe noted signs of strength after the liquidity sweep, suggesting a potential rebound above $90,000. Trader Timeless emphasized that reclaiming $89,000-$90,000 is crucial for bulls to maintain upward momentum. Meanwhile, increased whale activity on Binance and a spike in Solana network fees coincided with the decline, pointing to possible accumulation phases. The next few days will be telling.
