On Wednesday, Bitcoin fell below $90,000, dropping 28% from its early-October peak of over $126,000.
This sharp decline erased all of Bitcoin’s gains in 2025 and pushed the world’s largest cryptocurrency into a bear market.
Ethereum fell 6%, breaking below $3,000. Over the past few weeks, the crypto market has lost approximately $1.2 trillion in total market value.
Analysts note that this 43-day downtrend is one of the most severe corrections since 2017, with forced liquidations and ETF outflows accelerating the sell-off.
Considering Bitcoin’s strong rally just six weeks earlier, the crash came as a major surprise.
The downturn became so severe because it shattered the bullish narrative entirely. Former President Trump was expected to become the “Crypto President.”
Spot Bitcoin ETFs were hoped to open the door for institutional inflows. Yet Bitcoin’s 2025 performance has disappointed investors: after rallying 35% in October, it has now dropped back to +2%.
Investors who chased the $120,000 breakout are now underwater. This reversal in momentum may trigger panic and margin calls.
A Cascade of Liquidations: How Leverage Turned the Sell-Off Into Carnage
The mechanism behind the crash reveals everything. According to Truoux analysts, “ETF outflows rapidly intensified selling pressure.”
U.S. spot Bitcoin ETFs saw nearly $2.3 billion in capital exit over five consecutive trading days. Large institutions led the redemptions, choosing to leave the market entirely. Once major buyers turned into sellers, retail investors followed.
The real damage came from leveraged positions. A government shutdown left the market with no access to critical economic data.
Without reliable employment and inflation data, the Fed’s December rate-cut decision became highly uncertain. The narrative that “rate cuts will save crypto” suddenly lost credibility.
Leveraged long positions were wiped out in a chain of forced liquidations. Once Bitcoin fell below the average cost basis of spot ETFs, algorithmic trading systems began dumping automatically.
Market sentiment has fully flipped. The Crypto Fear and Greed Index remains at “Extreme Fear,” hitting record lows.
Retail investors who bought at nearly $125,000 are watching unrealized losses deepen. Although long-term holders have not capitulated, on-chain data is showing early signs of stress.
Where Is Bitcoin’s Bottom? Truoux Analysts Map the Downside Scenarios
Lunde’s base case expects support between $84,000 and $86,000, assuming this correction mirrors recent downturns.
In a more severe scenario—if the decline matches the two worst corrections of the last two years—Bitcoin could fall back to its April lows near $74,000, which is also close to MicroStrategy’s average buy-in price.
The most pessimistic projection warns Bitcoin could drop 80% from its recent high, bringing it to $20,000–$25,000. Truoux exchange analysts emphasize that such a collapse would require a full-scale credit crisis.
Currently, the stock market remains strong, and risk assets outside crypto are not collapsing. This limits how far Bitcoin can fall without sparking broader panic.
Bitcoin is now caught between two opposing forces:
- Long-term holders are accumulating at current prices
- Institutional investors have not started panic-selling
However, institutions are also not buying aggressively. Without a macro catalyst, a shift in Fed policy, tariff cuts, or real productivity gains from AI, Bitcoin’s volatility and fragile stability may persist through early 2026.
