Bitcoin Price News: 4 Reasons Why BTC Dropped Below $90K

The crypto market continues to tank, and its combined market cap is now approaching the $3 trillion thresholds, meaning a 30% drop from its October 6 peak.

President Donald Trump’s decision to raise tariffs by 100% on Chinese imports definitely marked the top of this short-lived cycle.

Crypto Market Stats – Source: CoinMarketCap

Cryptos started to recover in April as Bitcoin (BTC) hit a bottom at around $76,000. Since then, they started to surge until the top cryptos, and a handful of altcoins, rose to new all-time highs just a couple of months after.

As a result of the latest wave of selling, BTC has booked a 30-day loss of 19% while its yearly performance has swung to negative territory with a 4.3% retreat.

Here are a few reasons why Bitcoin has retreated below $90,000 recently.

#1 – Lower odds of a rate cut in December

The Federal Reserve’s hesitant attitude concerning a December rate cut prompted analysts to revisit their projections and reduced the odds of a cut from 91% before the FOMC meeting to 34% at the time of writing.

FedWatch Survey for December FOMC Meeting – Source: CME Group

This change in the dot plot is the main cause for the latest selling spree. Is this the beginning of a bear market, or is the sell-off nearing the exhaustion phase?

#2 – Large ETF Outflows

Investors have been withdrawing billions from Bitcoin exchange-traded funds (ETFs) lately. Data from Farside Investors shows that these funds have booked a 5-day streak of net outflows. In total, investors have taken out $2.2 billion during this period.

Meanwhile, the Fear and Greed Index, a widely followed market sentiment gauge, has dropped to its lowest level since April.

Yes, right around that time, Bitcoin hit a floor and started to bounce back.

However, nothing guarantees that history will repeat. For now, it seems that BTC has not found too many willing buyers at $90,000, which should have been a natural area of support for the top crypto.

#3 – $8.5 Billion in Long Positions Liquidated in November

A massive cascade of liquidations may have been responsible for BTC’s steep drop, as the market was quite over-leveraged once it started to climb above $120,000.

Since November started, nearly $8.5 billion worth of long positions have been wiped out of the market. That’s a huge number. Interestingly, this is just half of what the market took out in a single day during the October 10 flash crash.

Still wondering why bulls are nowhere to be found?

#4 – Loss of $100,000 Support

Looking at the daily chart, the next area of support for BTC stands at $88,000 – just an inch away from where the token is now.

BTC/USD Daily Chart (Bitstamp) – Source: TradingView

If the top crypto hits that area and bounces off it strongly, that could mark the end of this sell-off as the stars would line up. The Fear and Greed Index would act as a contrarian indicator in this scenario, and the same goes for net ETF outflows.

Meanwhile, if the downturn continues, the next area of support to watch would be $77,000, which is exactly the area from which BTC bounced off in April.

The macroeconomic scenario has not changed much apart from Powell’s comments, and the odds that the Fed will cut rates in December are low, but a third of the market still thinks that a 25bps cut is possible.

This could easily be a deleveraging event that will create room for new buyers to step in. The good news: Bitcoin will be $12,000(ish) above its recent low, which means that it could surpass its latest all-time high if market conditions start to improve.