Bitcoin dropped below the historic $100,000 level this week, leading a global selloff across crypto and traditional markets. The steep correction triggered more than $2 billion in liquidations, signaling a sharp reversal in investor sentiment as dollar strength and tight liquidity conditions pressure risk assets worldwide.
Bitcoin Falls Below $100K Amid Broad Market Rout
Bitcoin plunged 21% from its October peak, falling to an intraday low of $99,110 on Wednesday, according to CoinGecko data. The move marks Bitcoin’s weakest performance in four months, with the broader crypto market capitalization sliding to $3.44 trillion — a decline of over $400 billion in total value.
The downturn wasn’t limited to crypto. Traditional markets mirrored the weakness, with the S&P 500 dropping 3% and gold sliding 10% from recent highs. Analysts say the selloff reflects a shift away from risk assets as investors respond to a stronger U.S. dollar and tightening financial conditions.
$2 Billion in Liquidations Reflect Market Panic
The sharp decline triggered massive liquidations across leveraged crypto positions. Data from CoinGlass shows more than $2 billion in leveraged long trades were wiped out in just two days — marking one of the largest liquidation events since early 2024.
Bitcoin accounted for nearly half of those losses, while Ethereum also suffered a heavy drawdown, slipping to a four-month low near $3,000. The cascade of forced selling amplified the market’s downside momentum as traders rushed to de-risk amid uncertainty.
Analysts Identify Key Support Between $98K and $85K
Analysts believe the worst of the panic may not be over. Ryan Yoon, Senior Research Analyst at Tiger Research, said Bitcoin’s immediate support lies near $98,000, while a break below that level could open the door for deeper declines toward $85,000 — the next major liquidity zone.
Despite the selloff, Yoon maintains a long-term bullish outlook, reaffirming his $200,000 target for Bitcoin once market conditions stabilize.
“The recent correction is largely macro-driven rather than fundamental,” Yoon said. “Network metrics remain healthy, but traders are reacting to global risk sentiment.”
Dollar Strength and Liquidity Tightening Drive the Decline
Experts attribute the current downturn to U.S. dollar strength and shrinking market liquidity. Jiehan Chen, a lead analyst at Schroders, said the stronger dollar has put pressure on dollar-denominated assets like Bitcoin, making them less attractive to global investors.
Meanwhile, Tim Sun, Senior Researcher at HashKey Group, noted a shift toward safe-haven assets such as government bonds.
“Bonds were the only asset class to post meaningful gains,” Sun explained. “Bitcoin, gold, and equities all suffered synchronized declines, showing how liquidity stress is spreading across markets.”
Sun also highlighted concerns about short-term funding conditions, pointing to widening repo spreads and a surge in usage of the Federal Reserve’s Standing Repo Facility. The U.S. Treasury’s account balance has now exceeded $1 trillion, effectively draining liquidity from the financial system.
Government Shutdown Adds to Market Pressure
The ongoing U.S. government shutdown has compounded market fears. Analysts warn that prolonged political gridlock could further restrict liquidity and undermine investor confidence through the end of the year.
Prediction markets on Myriad — owned by Decrypt’s parent company Dastan — currently assign a 98.7% probability that this will become the longest shutdown in U.S. history.
Derek Lim, Head of Research at Caladan, said the liquidity squeeze is the primary driver behind the selloff, explaining that “even minor macro shocks are now amplifying volatility because liquidity buffers are thin.”
On-Chain Data Suggests Fundamentals Remain Strong
Despite the steep price correction, on-chain metrics indicate that Bitcoin’s network remains resilient. Verified CryptoQuant analyst XWIN Research said the current dip below $100,000 appears “primarily sentiment-driven” rather than a reflection of deteriorating fundamentals.
The Bitcoin Fear & Greed Index has dropped to 21, signaling extreme fear in the market. Yet, underlying network activity remains robust — hash rate levels are near all-time highs, and approximately $10.7 billion in stablecoins has flowed into Binance over the past week, potentially positioning traders for opportunistic buys.
Santiment also noted that social sentiment data shows “many investors continue to buy the dip with confidence,” echoing XWIN’s view that panic selling may not last long.
Outlook: Will Bitcoin Rebound or Drop Further?
While short-term volatility is likely to persist, analysts say Bitcoin’s next moves depend on whether liquidity conditions ease and macro sentiment stabilizes. A decisive recovery above $102,000–$105,000 could help restore bullish momentum, but a sustained break below $98,000 would raise the risk of testing $85,000 support.
For now, the market remains defensive as traders navigate heightened uncertainty across both crypto and traditional assets.
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