The cryptocurrency market is experiencing significant downward pressure today. Bitcoin’s price has fallen below the $86,000 threshold and is currently trading near $87,000. This sharp decline has triggered a widespread liquidation event, wiping out more than $650 million in open leveraged positions. A staggering 87% of these liquidated positions were bullish bets. Market sentiment, as measured by the Fear & Greed Index, has collapsed into a range of 11 to 16, indicating an atmosphere of “Extreme Fear.”
Institutional Accumulation Amidst the Turmoil
Despite the tense climate, notable institutional buying has emerged. MicroStrategy has executed another major purchase, acquiring an additional 10,645 BTC. This move brings the company’s total Bitcoin holdings to nearly 671,000 coins. This pattern of consistent accumulation by a major corporate holder signals a long-term confidence that appears undeterred by short-term price volatility.
Analysts are also observing a potential rotation of capital into other digital assets, such as Ethereum and select alternative coins. For instance, the token PIPPIN reached a new all-time high today even as the broader market retreated.
On-Chain Metrics Signal Cooling Interest
The current weakness extends beyond just price action. On-chain data reveals a notable cooling in network activity. The seven-day average of active addresses has dropped to 660,000, marking the lowest level seen in the past twelve months. This metric suggests declining interest from retail participants.
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Simultaneously, the mining sector is under strain. Reports indicate that approximately 400,000 mining rigs were taken offline in China’s Xinjiang region, causing the network’s hash rate to fall by roughly eight percent. Daily mining revenues have also decreased, falling from $50 million in the third quarter to around $40 million currently. This environment is putting margin pressure on smaller-scale mining operations.
Macroeconomic Headwinds Intensify
Broader global financial conditions are exacerbating the sell-off. In Japan, the central bank is signaling a potential interest rate hike, a move that could unwind the longstanding Yen carry trade. This strategy has for years provided a source of cheap liquidity for risk assets globally, including cryptocurrencies.
In the United States, the Federal Reserve maintains a cautious stance. Investor hesitation persists despite the U.S. Treasury Department injecting $78 billion in liquidity last week. Furthermore, a key U.S. Senate committee hearing on cryptocurrency regulation has been postponed, leaving institutional investors waiting for clearer regulatory guidance.
Critical Support Test at $85,000
The immediate technical focus for Bitcoin is the crucial support zone around $85,000. A decisive break below this level could catalyze further selling pressure, potentially bringing the psychologically significant $80,000 mark into view. In the near term, price direction is likely to be heavily influenced by upcoming U.S. economic data releases and the impending interest rate decision from the Bank of Japan. Historically, periods of extreme fear have often preceded market turning points; whether this pattern will hold true this time should become clear in the days ahead.
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