Bitcoin fell below the 90,000 dollar mark this week for the first time in seven months as the anticipated Trump rally completely vanished from the market. While many investors expected the 2024 election momentum to carry the asset to 150,000 dollars by year end, the current reality is a harsh 7 percent decline for the year that signals a potential fourth annual loss for the digital currency.
Unexpected Shift In Market Sentiment
The euphoria that followed the U.S. presidential election has been replaced by a quiet realization that political promises do not always translate into immediate liquidity. I saw many retail traders jumping in at the 126,000 dollar peak in early October thinking the sky was the limit, but they are now facing significant drawdowns as the Trump effect fails to materialize in the price action. It feels like the market has already priced in the favorable regulatory environment and is now looking for actual capital inflows that simply are not appearing.
Bloomberg recently pointed out that this downward trend is historic because it marks one of the few times Bitcoin has declined without a major exchange collapse or a massive fraud scandal. When I look at the order books today, the lack of follow through is striking despite institutional players like Strategy Inc. continuing to buy the dip. It seems that the massive 5.2 billion dollar withdrawal from U.S. spot Bitcoin ETFs since early October has created a hole that corporate buying cannot fill.
The correlation between Bitcoin and high growth tech stocks has also returned to nearly 0.90 which means the asset is behaving more like a risky tech bet than a digital safe haven. I noticed that every time there is a concern about AI overvaluation in the Nasdaq, Bitcoin feels the pressure almost immediately. This lack of independence from traditional finance makes it difficult for the asset to maintain a solo rally in a cooling economic environment.
Leverage Resets And Liquidity Sweeps
On December 16, 2025, the market experienced a violent 520 million dollar liquidation event that essentially wiped out anyone trying to catch a falling knife with high leverage. I monitored the data as over 180000 traders were liquidated in a single day, with long positions accounting for the vast majority of those losses. This was not a panic sell based on bad news, but rather a structural reset where the market cleared out overcrowded bullish bets to find a more sustainable floor.
This specific type of liquidity sweep often happens when the market stays stagnant for too long and professional traders decide to hunt for stop losses. I found that these resets are necessary for long term health, but they are incredibly painful for the average investor who is just trying to protect their savings. When liquidity is thin, especially during the holiday season, it does not take much to push the price down. I observed that the market capitalization lost nearly 100 billion dollars in just a few hours before trying to stabilize.
This fragile market structure suggests that we might stay in a range between 80,000 and 100,000 dollars for an extended period until a fresh wave of spot demand arrives.
Whale Behavior And Supply Imbalance
While retail investors are panic selling, the largest holders known as whales have actually started to accumulate again at these lower levels. Data from Santiment shows that transactions over 100,000 dollars reached a yearly high this week, indicating that the smart money is moving Bitcoins from exchanges to cold storage. I believe this divergence between price and whale activity is a key indicator that the bottom might be closer than the headlines suggest.
The supply demand imbalance is becoming more evident as public companies now hold over 8 percent of the total Bitcoin supply. This illiquid supply means that once the selling pressure from short term traders ends, the upward move could be just as fast as the recent drop. However, the current problem is that new buyers are waiting for the price to drop even further, perhaps to the 74,000 dollar region, before they commit large amounts of capital.
I noticed a shift in the way long term holders are acting as well. In 2025 alone, nearly 300 billion dollars worth of Bitcoin that had been dormant for over a year has re-entered circulation. This created a massive supply wall that the market is still trying to digest. It is a classic case of the early adopters exiting while the latecomers are left holding the bag during a period of low volume and high uncertainty.
North American Macroeconomic Headwinds
The economic situation in the United States and Canada is playing a much larger role in this Bitcoin slump than most crypto enthusiasts want to admit. Recent inflation data came in slightly higher than expected, which has led the Federal Reserve to signal that interest rates will remain higher for longer. For an asset like Bitcoin, which pays no dividend or interest, a high rate environment is a significant headwind. I noticed that every time a Fed official gives a hawkish speech, the Bitcoin price takes a hit within minutes.
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The U.S. Dollar Index has climbed back above 106, making dollar denominated assets like Bitcoin more expensive for international buyers.
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Yields on the 10 year Treasury have stayed near 4.5 percent, offering a risk free return that is very attractive to conservative investors.
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Consumer debt in North America has reached record highs, leaving less disposable income for speculative investments in the crypto market.
When the cost of borrowing money is high, the appetite for risk naturally decreases. I have observed that many people are much more focused on paying down their mortgages and car loans right now than they are on buying the latest crypto dip. This shift in consumer behavior is a powerful force that can override any amount of positive crypto news. Until there is a clear path toward lower interest rates, Bitcoin will likely struggle to sustain a move back toward its all time highs.
Technical Breakdowns And Support Zones
From a technical perspective, the chart for Bitcoin looks increasingly fragile. We have broken below the 50 day and 100 day moving averages, which were previously acting as strong support. I saw a clear head and shoulders pattern forming on the daily chart throughout November, and the recent break below the neckline at 92,000 dollars confirmed the bearish reversal. The next major support zone sits around 78,000 dollars, which coincides with the breakout point from early 2025.
If the 85,000 dollar level does not hold through the weekend, we could see a very fast move down to the high 70s. I am looking at the Relative Strength Index, which is currently near 30, meaning the asset is nearly oversold. While an oversold bounce is likely, the overall momentum remains firmly to the downside. The volume on the selling days has been significantly higher than the volume on the buying days, which is a textbook sign of a downtrend that has not yet reached its exhaustion point.
I found that watching the volume profile is often more useful than looking at simple price levels. There is a huge gap in the volume profile between 82,000 and 85,000 dollars, which means price could move through that range very quickly if sellers remain aggressive. For those looking to manage their risk, it might be wise to wait for a successful retest of a previous support level before assuming the worst is over.
Impact Of Exchange Inflows And Sell Walls
The amount of Bitcoin being moved onto exchanges has hit a three month high, which usually precedes a period of selling pressure. When investors move their coins from private wallets to exchanges, it is almost always with the intent to sell or to use them as collateral for margin. I tracked several large transactions from dormant wallets that were created in 2017, suggesting that even some long term holders are finally deciding to take their profits. This influx of supply is meeting a market that is already low on liquidity, creating a perfect storm for price depreciation.
On the major exchanges like Coinbase and Kraken, I have observed massive sell walls being placed just above the current price. These walls act as a ceiling, preventing any upward momentum from gaining traction. It feels as though there is a coordinated effort by some larger players to keep the price suppressed while they exit their positions. This type of market manipulation is common during low volume periods, and it can be incredibly frustrating for retail traders who are trying to find a reason to stay bullish.
The supply and demand imbalance is the most direct cause of the current slump. When there are more people wanting to exit the burning building than there are people wanting to enter, the price of admission has to drop. I believe we are currently in the middle of this exit phase, and it will likely continue until the supply of coins on exchanges begins to trend downward again.
Psychological Warfare Of A Fourth Annual Loss
The idea that Bitcoin could end the year in the red for a fourth time is a massive psychological blow to the community. For years, the narrative was that Bitcoin always goes up over a four year cycle, but 2025 is challenging that long held belief. I have sensed a palpable shift in the tone of online forums and Discord groups. The bravado of the early year has been replaced by a quiet desperation, with many people asking if the four year cycle theory is officially dead.
This loss of faith is perhaps the most dangerous thing for the market. If investors stop believing in the long term growth story, the asset loses its primary value driver. I think it is important to remember that markets do not move in straight lines and that even the most successful assets in history have gone through multi year periods of stagnation. However, for a generation of investors used to instant gratification and 100 percent annual returns, a fourth year of losses feels like an eternity.
I have started to see more mainstream financial media outlets in the U.S. and Canada running stories with headlines about the end of the crypto era. While these reports are usually hyperbolic, they do influence the behavior of the general public. When your neighbor or your coworker hears that Bitcoin is crashing again, they are much less likely to open an account and start buying. This dries up the pipeline of new capital that is necessary to sustain a bull market.
Practical Portfolio Management In A Bearish Phase
In a market like this, the goal should be capital preservation rather than aggressive growth. I have moved a significant portion of my own crypto holdings into stablecoins over the last month to protect against further downside. This allows me to stay in the ecosystem and be ready to buy when the trend finally shifts, without having to watch my net worth evaporate every time there is a liquidation event. It is a simple strategy, but it is one that many people ignore in favor of trying to time the absolute bottom.
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Limit your exposure to altcoins, as they tend to fall much harder than Bitcoin during market corrections.
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Reinvest in your own financial education so you can better understand the macro forces at play.
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Set price alerts at key support levels instead of constantly checking the charts.
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Automate your purchases through a dollar cost averaging strategy to take the emotion out of the process.
I found that the most successful investors I know are the ones who can remain calm when everyone else is panicking. They view these periods of decline as a natural part of the market cycle and as an opportunity to accumulate assets at a discount. If you believe in the long term value of decentralized finance and digital scarcity, then a 20 percent drop is just a sale. If you were only here for a quick profit, then this market is doing its job of shaking you out.
Looking Toward The Next Catalyst
The search for the next big catalyst is already underway. Some are looking toward the potential approval of a spot Ethereum ETF with a staking component, while others are hoping for a breakthrough in Bitcoin layer 2 technologies. I believe the real catalyst will be a shift in the global liquidity cycle. Historically, Bitcoin has performed best when the global money supply is expanding. Currently, we are in a period of contraction, but that cannot last forever.
Governments in North America are facing massive debt loads, and eventually, they will have to return to a policy of monetary easing to manage those debts. When the printing presses start running again, assets with a fixed supply like Bitcoin will once again become the preferred destination for capital. It is not a matter of if, but when. The challenge is surviving the current winter so that you are still around to enjoy the next spring.
I am also keeping a close eye on the adoption of Bitcoin by small and medium sized businesses. In my local area, I have noticed more shops starting to accept lightning payments as a way to avoid high credit card fees. While this is still a small trend, it represents the kind of real world utility that will ultimately determine the success of the asset. The price might be down, but the technology is still moving forward every single day.