Bitcoin prices surrendered their psychological $90,000 stronghold in early Asian trading on January 21, marking a decisive collapse that effectively wiped out the asset’s early 2026 gains.
According to crypto slate Data, the world’s largest digital asset, plunged to a session low of $87,282 over the past 24 hours.
This economic downturn was not an isolated event, but part of a broader market-wide decline that caused significant damage to the entire digital asset ecosystem. Major alternative cryptocurrencies such as Ethereum, XRP, Cardano, and Solana all posted significant losses, reflecting the demotion of leadership.
Meanwhile, the sharp reversal marks the culmination of a brutal two-day slide that pushed the emerging industry back to price levels last seen in late 2025, shattering the bullish momentum that had characterized the first few weeks of the new year.
Leverage flash and aggressive selling
Price corrections are the norm in crypto markets, but the speed of the decline points to a toxic combination of derivative liquidations and genuine supply shocks.
The speed of movement was most evident in the futures market, where a “liquidation cascade” — a scenario in which a drop in price triggers a forced sell order, which drives the price lower — accelerated the decline.
CoinGlass data reveals the extent of the damage. Traders holding long positions (betting the price to rise) have lost more than $1.5 billion in the past 48 hours.
This number represents the capitulation of bulls who were eyeing a breakout above $100,000 as Bitcoin failed to sustain support near the low $90,000 area.
However, this price decline was not purely due to a flash of over-leveraged speculation. Unlike “fraud cores,” which are quickly bought up, this movement was supported by aggressive selling in the spot market, which is an exchange of actual assets.
CryptoQuant’s “net taker volume,” a key indicator of market aggressiveness by tracking whether traders are buying and selling, hit a negative $319 million figure on January 20th.
This large negative number indicates that motivated sellers are aggressively bidding to eliminate positions and overwhelming the available liquidity.
Notably, this is the second time in recent days that this indicator has fallen below -$300 million. The last time this happened was on January 16th, when Bitcoin was still trading above $95,000.
Compounding the bearish outlook is the behavior of “whale” investors.
CryptoQuant’s Whale Screener, which tracks deposits from over 100 active high-net-worth wallets, detected a spike in supply to the exchange.
Whales deposited $400 million worth of Bitcoin into spot exchanges on January 20, following a similar surge of $500 million worth of Bitcoin on January 15.
Historically, large deposits on spot exchanges have consistently preceded selling pressure, or at least created a wall of selling liquidity that inhibits potential price recovery.
Moreover, the negative market sentiment was confirmed by the performance of Spot Bitcoin ETF over the past two days.
According to data from Soso Value, 12 funds have shed nearly $900 million over the past two trading sessions, exacerbating the current downward trend in the market.
Macro headwinds and “Japanese” phenomena
Beyond the internal mechanisms of the crypto market, a complex and increasingly hostile macroeconomic backdrop is exerting severe downward pressure.
Market headlines have been dominated by a phenomenon analysts are calling “Japanic,” a contagion effect stemming from Japan’s bond market that is destabilizing global risk assets.
Presto Research argued that the real epicenter of the current market stress is Tokyo, not the US.
The company said the chaotic decline in Japanese government bonds (JGBs) spilled over into broader international markets, triggering “Sell America” trades. In this environment, correlations converge and major stocks, US Treasuries, the dollar, and Bitcoin fall in tandem as liquidity is pulled from the system.
The change was triggered by surprisingly low auctions for 20-year Japanese government bonds. In Tuesday’s auction, the bid-to-market ratio (a key indicator of demand) was 3.19 times, significantly lower than the previous bid of 4.1 times.
This suggests demand for Japanese government bonds is softening, with markets already nervous about Japan’s fiscal health.
The Kobeisi letter provides further context on this capital flight, noting that Japanese insurance companies sold $5.2 billion in bonds with maturities of 10 years or more in December.
This was the highest monthly sales since data collection began in 2004 and the fifth consecutive month of net sales.
As Japanese financial institutions (historically one of the world’s largest holders of foreign debt) retreat to domestic safety, liquidity is tightening globally, leaving risky assets like Bitcoin vulnerable.
Bitunix analysts emphasized the duality of this moment in digital assets. crypto slate.
According to the company, the sudden turmoil in the government bond market has once again highlighted the vulnerability of traditional safe assets. They noted that in the short term, simultaneous pressure on bonds and risk assets could weaken the crypto market’s risk appetite.
But Bitunix analysts also point to a potential long-term reversal inherent in this disruption. In the medium term, this dynamic could strengthen the case for the allocation of Bitcoin as a non-sovereign asset if bond market politicization and financial intervention become a permanent feature.
They concluded that in the long term, the continued decline in global interest rates and currency stability may ultimately lead to a reassessment of the strategic weight of crypto assets in portfolio allocations.
The instability has fueled intense speculation about the Bank of Japan’s next move ahead of a snap general election on February 8.
Presto Research outlines two dual outcomes. One is the ‘Liz Truss’ moment, which refers to a revolt in the UK bond market in 2022 caused by fiscal mismanagement, and the other is a return to ‘fiscal domination’, where central banks are forced to aggressively print money to limit yields.
At the same time, trade policy frictions are creating further uncertainty.
Matrixport points out that there has been a decisive shift in sentiment in the Bitcoin options market, with demand for puts (downside protection) outstripping calls.
The company attributed this defensive stance to President Donald Trump’s renewed threat to impose tariffs of 10% to 25% on European goods, prompting institutional investors to hedge against near-term macro volatility.
What’s next for Bitcoin?
Despite the prevailing gloom, not all indicators point to an extended bear market.
Glassnode’s weekly analysis characterizes the current setup as a “momentum slip,” a cooling of an overheated market that remains statistically “above neutral.”
However, the technical reality on the chart remains volatile.
CryptoQuant analyst Axel Adler Jr. identified the $89,800 to $90,000 range as a key line of defense for the bulls.
This price range is important because it represents the “cost basis” (average purchase price) of the freshest buyers in the market, specifically the cohort of short-term holders who entered from the previous day to the last month.
Adler warns that a sustained collapse below this range will submerge these populations simultaneously. When short-term speculators have unrealized losses, they become very sensitive to price declines, increasing the risk of panic selling that accelerates downtrends.
On the other hand, even if Bitcoin manages to rebound, the upward path is littered with resistance. The cost basis for the 1-3 month holder cohort is approximately $92,500.
Since these traders are currently in losses, they are likely to sell on relief rallies aiming to break even, creating natural selling pressure.
Furthermore, the total realized price of all short-term holders has reached $99,300, forming a formidable ceiling that must be breached to reignite bullish belief.
For now, Bitcoin remains in a delicate balance. Caught between aggressive liquidation flushes and a challenging macro environment, the $90,000 level is the difference between consolidation and further correction.
(Tag translation) Bitcoin
