Bitcoin Slips Under $90,000, Crypto Market Loses $130B. Can BTC Fall More?

Bitcoin took a serious beating last week. The flagship cryptocurrency dropped below the crucial $90,000 support level, dragging down the entire digital asset sector with it. When the dust settled, the crypto market loses approximately $130 billion in total value.

BTC traded as low as $89,177 during the worst of it. That’s an 18% drop from the all-time high of $108,000 hit just weeks earlier in mid-December. Ethereum wasn’t spared either. ETH fell 15%, and smaller coins like Solana saw similar double-digit losses.

The December sell-off caught many traders off guard. Just days before, Bitcoin spot ETFs were celebrating record inflows. Now, those same funds are bleeding capital at an alarming rate.

Fed Torpedoes the Rally

So what exactly went wrong? Start with Jerome Powell.

The Federal Reserve cut rates by 25 basis points on December 10, bringing the benchmark rate to 4.25-4.5%. Normally, rate cuts are good news for risk assets. Lower borrowing costs mean more liquidity flowing into markets like crypto.

But Powell threw cold water on the party. Instead of signaling more cuts ahead, the Fed chair projected only two additional reductions in 2025. Markets had priced in four cuts. That gap between expectation and reality triggered panic selling across the board.

Bitcoin and the broader crypto market tumbled on Friday as investors dumped digital assets after the Federal Reserve said it would make fewer interest rate cuts in 2025 than expected, according to Fortune Crypto reporting.

The moment was terrible. Right after Bitcoin hit $100,000 – its peak on December 5 – it dropped hard. In under a fortnight, almost $20K vanished from its value.

Also Read: Why Bitcoin Turns Bearish After Every FOMC Update – Fed Policy Explained

Leverage Carnage

When Bitcoin drops fast, leveraged positions get wrecked. That’s exactly what happened.

Data from Coinglass shows almost $1.9 billion in liquidations within a 24-hour window during the first week of December. These forced liquidations create a nasty feedback loop. Traders get a margin called. They sell. Price drops further. More traders get liquidated. Round and round it goes.

Bitcoin ETFs faced a significant sell-off on December 19, reaching net outflows of a record $671.9 million, marking the largest single-day outflow event of the year. That’s institutional money heading for the exits, not just retail panic.

The bleeding didn’t stop there. By month’s end, Bitcoin ETFs recorded a combined outflow of $426.13 million on December 30, with Fidelity’s FBTC leading the withdrawals, losing $154.64 million in assets.

BlackRock’s IBIT fund, which launched to massive fanfare in January, experienced its tenth outflow day since inception. BlackRock’s iShares Bitcoin Trust ETF experienced its largest recorded outflow ever, reaching $188.7 million on December 24, 2024.

When you add it all up, the crypto market loses became impossible to ignore. Total ETF outflows exceeded $1.8 billion in the final two weeks of December alone.

Other Pressure Points

The Fed wasn’t the only culprit. Several smaller factors piled on.

The government of Bhutan sold 406 Bitcoin worth about $40 million right as prices were attempting to break higher. When large holders dump into a rising market, it creates resistance that’s hard to overcome.

Then there was the quantum computing scare. Back in early December, Google introduced a new chip called “Willow.” A few news sites jumped the gun, shouting that Bitcoin might be in danger from such tech. But specialists quickly stepped in – clearly stating today’s quantum systems can’t crack blockchain codes at all. Still, harm had already happened. Nervous traders sold first and asked questions later.

Long-term holders also took profits. After Bitcoin hit $108,000, many investors who’d been holding since $20,000 or $30,000 decided to cash out. You can’t blame them. An 18% correction is normal in crypto terms, but seeing your portfolio drop by tens of thousands of dollars in days tests anyone’s conviction.

Also Read: Bitcoin Price Prediction 2025–2028: Halving Cycles & Institutional Adoption

Where Things Stand Now

Bitcoin is currently fighting to hold the $90,000-$92,000 zone. This range has become critical. Break above it convincingly, and BTC could retest $100,000 before year’s end. Lose it, and the next major support sits around $86,000. Below that, things get uncomfortable fast. The $80,000 level would likely come into play.

Technical indicators tell different stories. The RSI shows some divergence, suggesting bullish momentum may be waning. On-chain metrics paint a more optimistic picture. The 365-day MVRV ratio indicates about 33% of holders who bought in the past year remain profitable. That’s not terrible. During real bear markets, that number drops much lower.

Analyst sentiment is mixed. Brian Rudick from GSR told Fortune he views this as “a healthy correction in the path to eventually and ultimately moving much higher from here.” Others aren’t so sure. Deutsche Bank analysts highlighted five major headwinds, including Fed hawkishness, stalled crypto legislation, institutional withdrawal, and profit-taking by long-term holders.

What’s undeniable is that the crypto market loses billions during corrections like this. It’s happened before. It’ll happen again. The question investors care about is whether we’ve seen the bottom.

The Bull Case

Despite recent pain, several factors support higher prices ahead.

The Federal Reserve ended its quantitative tightening program on December 1. That means the central bank stopped actively draining liquidity from the financial system. Historically, when the Fed pivots from tight to neutral or loose policy, Bitcoin tends to rally with a 60-90 day lag.

Global M2 money supply hit record levels above $105 trillion in November. More money in the system generally flows into risk assets eventually. Bitcoin included.

Institutional adoption continues expanding. MicroStrategy bought another $962.7 million worth of Bitcoin in December, bringing their total holdings to over 400,000 BTC. That’s a company putting serious money where its mouth is. Other corporations are watching.

The 2024 halving cut the new Bitcoin supply in half. Just 900 BTC each day now, down from 1,800. With fewer coins coming out but interest staying strong or even rising, simple math hints that value could climb gradually. Fewer coins available usually means people pay more if demand holds up.

Trump won in November, which might mean clearer rules soon. His team picked people who like cryptocurrencies for important jobs. After that, Gary Gensler stepped down from leading the SEC.

The Bear Case

Now for the uncomfortable truth. Several warning signs suggest more pain could be coming.

The crypto fear and greed number’s been stuck in the ‘afraid’ zone lately – bouncing from 24 to 29 out of 100. Once feelings turn this sour, prices usually can’t move up easily. One bit of worry pulls another along. People hold back, needing proof before they jump in, so things might keep dragging even if the basics don’t fully justify it.

Altcoin speculation is heating up relative to Bitcoin. Some analysts point to a dangerous divergence in open interest data. Altcoin futures positions are through the roof while Bitcoin remains relatively muted. This pattern preceded the late-2024 crash. When retail piles into high-risk altcoins using leverage, it often ends badly for everyone.

Regulatory clarity remains aspirational, not actual. Trump hasn’t taken office yet. Campaign promises about strategic Bitcoin reserves and crypto-friendly policy are just promises until they’re a reality. Things can change fast in politics.

The broader macro environment is uncertain. Recession fears are real. Corporate earnings could disappoint. Geopolitical tensions remain elevated. If traditional markets sell off hard, crypto will likely follow.

What Should You Do?

Here’s something people hate admitting: I’m clueless. So are you. Experts? Same thing. Whoever says they’ve got Bitcoin figured out next month is faking it – or living in a dream.

Here’s the thing: Bitcoin swings are just part of the ride. 15-20% corrections happen regularly during bull markets. Similar drops occurred in May and last December. Both looked scary at the time. Both were buying opportunities in hindsight.

The fundamentals supporting Bitcoin long-term haven’t changed. Fixed supply. Growing adoption. Increasing institutional interest. Improving infrastructure. These trends remain intact regardless of short-term price action.

For long-term holders, this might just be noise. For traders, it’s either opportunity or trap depending on your timing and risk management. The key is sizing positions appropriately and not using leverage if you can’t afford to get liquidated.

If you’re thinking about buying, dollar-cost averaging makes sense here. Nobody catches exact bottoms. Spreading purchases across several weeks or months reduces timing risk.

If you’re already holding, ask yourself: Has anything fundamentally changed about why you bought Bitcoin in the first place? If the answer is no, sitting tight makes sense. If yes, reassess your position.

Final Thoughts

The crypto market loses $130 billion when corrections like this hit. It feels awful in the moment. But zoom out. Bitcoin is still up over 120% year-over-year. ETFs brought in $35 billion of net inflows in 2024 despite the recent outflows. Mainstream adoption continues accelerating.

This isn’t the end of the bull market. It’s probably just a shakeout. Weak hands are getting flushed. Overleveraged positions are getting liquidated. The market is resetting to healthier levels.

Or maybe I’m wrong. Maybe we’re heading into a prolonged bear market. That’s the thing about crypto. You never really know until it’s already happened.

Position sizing matters. Risk management matters. Not investing money you can’t afford to lose matters. Everything else is just noise.

As I write this, Bitcoin is sitting at $89,871. That’s a bit of a bounce from the $89,177 low we saw, but still a long way from the $108,000 peak hit just weeks ago.

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Disclaimer:

Look, we’re just journalists reporting the news here, not your financial advisors. Everything you read above is for information purposes only. Crypto is wild, unpredictable, and can absolutely wreck your savings if you’re not careful. Never invest money you can’t afford to lose. Seriously, we mean it. Do your own research, talk to actual licensed financial professionals, and remember that past performance means absolutely nothing when it comes to future results. The crypto market can turn on a dime, and what’s hot today might be toast tomorrow. We’re not responsible for your investment decisions, good or bad. Trade smart, stay safe, and don’t bet the farm on anything you read on the internet, including this article.