Crypto Market in Turmoil: Why Bitcoin Could Drop Below $95K

Bitcoin’s recent slide has shaken investor confidence as the cryptocurrency’s price edges closer to a pivotal support level. In the last 24 hours, long-position liquidations surged, the user base hit record lows, and institutional support showed signs of weakening. All eyes are on Bitcoin, with analysts predicting a potential crash below $95,000.

Traders Brace for Impact as Liquidations Hit $838 Million

The crypto market has been under relentless pressure. In just one day, liquidations soared to $838 million, with Bitcoin contributing $247.39 million of that figure. The most significant single liquidation occurred on HDX’s BTC-USDT pair, wiping out $98.46 million.

The current open interest in the crypto derivatives market has dropped to $65.34 billion, while the long-to-short ratio hovers below 0.90. Funding rates remain steady at 0.0094%, but the declining number of long positions signals a bearish outlook.

• Bitcoin liquidations in 24 hours: $247.39 million.
• Market-wide liquidations: $838 million.
• Long-to-short ratio: 0.8737.

With these numbers painting a grim picture, traders and analysts are wary of further downside.

Active Bitcoin Addresses Plunge to Record Lows

As Bitcoin struggles to maintain its value, its network activity has also taken a significant hit. The number of daily active addresses, which started the year at 1.28 million, has fallen to 1.22 million—a drop of nearly 5%. When compared to the previous week, the decline becomes even starker, with active addresses down 17.86%.

A shrinking user base often correlates with diminishing confidence and reduced transaction volumes, both of which can exacerbate price declines.

Notable stats:

• Active addresses on January 1, 2025: 1.28 million.
• Current active addresses: 1.22 million.
• Weekly decline in active addresses: -17.86%.

The lack of activity suggests Bitcoin’s current price struggles are not just market-driven but also reflective of waning user engagement.

Institutional Support: A Waning Pillar?

Institutional investors, often regarded as a stabilizing force in the crypto market, seem to be retreating. Spot Bitcoin ETFs in the U.S. market registered a $517.67 million inflow last week, significantly down from $1.76 billion in the previous week.

While the first week of Donald Trump’s presidency buoyed Bitcoin to over $109,000, the second week is casting a shadow. With institutional inflows slowing, concerns are mounting that Bitcoin might lose one of its critical support structures.

Institutional activity highlights:

• Total inflows into U.S. Bitcoin spot ETFs last week: $517.67 million.
• Net assets under management: $123.06 billion.
• Previous week’s inflows: $1.76 billion.

If institutional interest continues to wane, the $90,000 mark could become a reality.

Technical Analysis: $95K in Danger

From a technical standpoint, Bitcoin’s charts are alarming. The cryptocurrency is now trading below its 200-day exponential moving average (EMA) at $98,173. With a 7% drop from its recent highs, the pressure is mounting.

Key indicators point to further downside:

• The 4-hour relative strength index (RSI) is at 25.93%, signaling oversold conditions.
• The 20-EMA is on the verge of crossing below the 50-EMA, indicating a sell signal.
• Support levels: $97,396 and $95,000.
• Resistance levels: $101,477 (38.20% Fibonacci retracement).

If the current correction continues, Bitcoin could test the 78.60% Fibonacci retracement level at $94,474.

Traders should keep a close eye on these levels to gauge Bitcoin’s next move.