Isabella García
Bitcoin sank to a new seven-month low on Monday night, briefly falling to $89,650, according to PRIME’s data. The price later recovered slightly to around $89,990, but the asset remained down over 5.5% in 24 hours, extending a sharp downtrend that began in late October.
Rachael Lucas, a crypto analyst at BTC Markets, said the breakdown of the $90,000 psychological level highlights ongoing fragility in the market. She added that institutional investors appear to be leading the sell-off, with major ETF outflows indicating widespread profit-taking ahead of the year’s end.
U.S. spot bitcoin ETFs have seen more than $3 billion in net outflows over the past three weeks, according to SoSoValue.
Short-Term Sellers Add Heavy Pressure
Vincent Liu, CIO at Kronos Research, noted that while long-term investors remain confident in Bitcoin’s role as “digital gold,” short-term traders are increasing downward pressure on prices. He pointed to leveraged positions and funds reducing exposure as key contributors to the recent declines.
Macroeconomic uncertainty is also weighing on the market, with ongoing liquidity issues and capital rotating out of risk assets.
Liquidity Tightens Amid Government Shutdown and Fed Uncertainty
Analysts have long warned that liquidity has been constrained due to the recent U.S. government shutdown, which elevated the Treasury General Account and limited federal spending. Additionally, investor sentiment remains shaky as the market awaits the Federal Reserve’s December interest rate decision.
While traders had initially expected another rate cut, new reports indicate that the Fed is split on the move. The CME FedWatch Tool now assigns a 57.1% probability that the central bank will hold rates steady next month.
However, experts believe that the government reopening could ease liquidity pressures, potentially helping crypto markets stabilize.
Key Technical Levels to Watch
Liu highlighted that Bitcoin dropping under $90,000 reflects a short-term pullback, with the next support area between $85,000 and $87,000. Reclaiming the $90,000 level remains essential for restoring buyer confidence — especially with market sentiment sitting at a deeply pessimistic 11 on the Fear & Greed Index.
Lucas from BTC Markets said the next major support sits at $85,000, while $80,000 represents a critical line. A breakdown below that could push BTC toward $74,000, a price level last reached in February.
What Traders Should Watch Next
The Fed’s December meeting continues to be the most important catalyst for market movement, with Thursday’s U.S. unemployment report expected to shape expectations around future rate decisions.
Lucas added that year-end tax strategies could further fuel selling as investors lock in results before December closes. Meanwhile, geopolitical news or major policy shifts could introduce additional volatility. On the bright side, positive ETF developments or notable network upgrades may help stabilize sentiment.
