Bitcoin Plunges 21% to $99K, Triggers $2B Liquidations

Bitcoin’s dramatic decline below the historic $100,000 threshold on Tuesday marked a significant turning point for cryptocurrency markets, with the digital asset dropping to an intraday low of $99,110 before recovering slightly. According to CoinGecko data, this represents a 21% decline from Bitcoin’s October peak, contributing to a broader crypto market capitalization fall to $3.44 trillion—the lowest level in four months. The sell-off triggered over $2 billion in liquidations across digital assets, marking the second consecutive day of major leverage unwinding in crypto markets.

The downturn wasn’t isolated to cryptocurrencies. Traditional risk assets also suffered significant losses, with the S&P 500 index falling 3% from its peak and gold declining 10% from recent highs. Tim Sun, Senior Researcher at HashKey Group, told Decrypt that “bonds were the only asset class to post meaningful gains, while most risk assets—including Bitcoin, gold, and equities—saw broad-based pullbacks.” This synchronized decline across multiple asset classes indicates a fundamental shift in market dynamics toward risk aversion rather than isolated crypto market weakness.

Multiple analysts pointed to U.S. dollar strength as a primary catalyst for the market-wide decline. Jiehan Chen, Operations Onboarding Lead Analyst at Schroders, told Decrypt that “USD strength may be one of the main driving forces behind the market-wide fall in price,” a sentiment echoed by other experts who noted that dollar-denominated risk assets typically face pressure during periods of dollar appreciation.

Beyond currency dynamics, concerning signals in short-term funding markets have amplified selling pressure. Tim Sun highlighted widening spreads and increased usage of the Federal Reserve’s Standing Repo Facility as indicators of tightening liquidity conditions. Compounding these concerns, the U.S. Treasury account has surpassed $1 trillion, effectively draining liquidity from the financial system. Derek Lim, Head of Research at Caladan, confirmed that tightening liquidity is amplifying the ongoing selloff, creating a challenging environment for risk assets.

The ongoing U.S. government shutdown has added another layer of uncertainty to already fragile market conditions. On prediction market Myriad, owned by Decrypt’s parent company Dastan, users placed a 98.7% chance that the current government shutdown will be the largest in U.S. history. This political uncertainty, combined with tightening liquidity, has created a perfect storm for risk asset depreciation.

Despite the sharp price decline, analysts see potential support levels that could stabilize the market. Ryan Yoon, Senior Research Analyst at Tiger Research, expects Bitcoin to hold at $98,000 and maintains his long-term $200,000 price target. Tim Sun identified $85,000 as a strong area of support for Bitcoin even if downside pressure persists, providing investors with clear reference points for potential market stabilization.

On-chain data reveals a more nuanced picture than the price action alone might suggest. According to verified CryptoQuant analyst XWIN Research, “Bitcoin’s recent dip below $100K is primarily sentiment-driven,” with the Fear & Greed Index plunging to 21 indicating extreme fear. However, key network fundamentals remain robust, with hash rates near all-time highs and $10.7 billion in stablecoins flowing into Binance—potential dry powder for future purchases.

On-chain analytics platform Santiment echoed this perspective in a Wednesday tweet, noting that despite Bitcoin’s drop below $100,000, “social data indicates there are still many buying dips with confidence.” This divergence between negative price sentiment and strong underlying fundamentals, combined with significant stablecoin reserves on exchanges, suggests the potential for rapid recovery once market sentiment improves.