Bitcoin Drops Below $88K: Ether Falls 6% Amid Global Market Shock

On Monday, the cryptocurrency market underwent a drastic decline, with Bitcoin dropping more than 4% to settle at below $88,000 in early Asian trading hours. Moreover, Ethereum also saw a drop, losing almost 6% and going below $2,900, which indicates the return of uncertainDigital assets' behavior.

According to the information provided by CoinMarketCap, this bearish trend is connected with the previous 30-day loss doing a total of about 20%. The analysts link this rough market condition to the high leveraged trading positions and the misgivings about the economy in general. The market capitalization of the whole crypto market is now $2.94 trillion, while the trading volume in the last 24 hours amounted to $116.18 billion.

The market players are keeping a close eye on the BofJ’s possible change of course. The increase in the Japanese government bond yields that reached the highest level in 15 years lately has given rise to the fear of a possible hike in interest rates, which might lead to sell-offs in the Asian markets. Over the last day, the long positions worth $16 million in Bitcoin have been liquidated. A few days earlier in October, the leveraged positions amounting to $19 billion were obliterated very shortly after the Bitcoin price reached its all-time high of $126,251.

As of the time of writing, Bitcoin was changing hands at $86,440, a decrease of 4.63%, with a market cap of $1.72 trillion and a trading volume of $52.4 billion in the last 24 hours. The technical analysis indicates that Bitcoin has fallen through the important support level of $90,950 and if the liquidating forces are strong enough, there can be a further downward movement to the level of $87,000. Traders consider the low of October around $80,659 as the next major support point.

Ethereum’s value slipped down to $2,830, a 5.07% drop, while its market valuation has been assessed at $341.57 billion and the trading volume has grown by 44.8% reaching $18 billion. Tether was stable at $1, while XRP was exchanged for $2.05, which is a 6.55% decrease. Binance Coin faced a decline of 4.71%, amounting to $831.89.

Market specialists indicate to exercise caution. Sean McNulty, the APAC derivatives chief at FalconX, ascribed the cautiousness by saying “December has opened in a risk-off tone. There are concerns over poor inflows to Bitcoin ETFs, and the absence of dip buyers is also worrying. $80,000 is the crucial support level to be monitored.”

Riya Sehgal, a Delta Exchange Research Analyst, pointed out the forced liquidations reflected in Bitcoin’s plunge below $87,000 and a 38% surge in trading volumes, rather than a fundamental collapse. She went on to say that nearly $300 million in leveraged longs had been wiped out. "The dip under $89,500 takes the near-term view down, but once the excess leverage is cleared, Bitcoin could find its footing around $90,000–$92,000," Sehgal mentioned.

Apart from the above factors, other things that will influence crypto prices include the forthcoming US Federal Reserve rate decision, possible Fed leadership changes under Donald Trump, and the performance of the Asian markets after their recent rallies. Harish Vatnani, the Head of Trade at ZebPay, pointed out one of the US jobless claims, which are at 1.96 million, and a softening labor market, as the extra pressure points. He suggested $93,500 and $100,000 as solid resistance levels, while $85,000 and $80,000 would be important supports.

The WazirX Trading Desk cites that Bitcoin is at a decisive macro junction. A declining US dollar could make liquidity conditions more favorable, thus leading to an increase in the accumulation. "Digital assets are more and more starting to function as cross-asset hedges against global monetary uncertainties," as per the desk’s remarks.

Akshat Siddhant, who is the Lead Quant Analyst at Mudrex, noted that bitcoin ETFs had a net inflow for the first time since October, pointing to possible institutional interest. He further stated that $85,000 represents a significant support level while $92,400 is the immediate resistance.

CoinSwitch Markets Desk highlighted that the big long liquidations have been absorbed. If $86,000–$87,000 is maintained, the path for moves towards $89,000–$90,000 could be opened. WazirX determined that high trading volumes in Bitcoin and Ethereum, which indicate active market participation and caution, signal behavior of the market in the midst of high volatility.