On January 20, the price of the leading cryptocurrency fell below $88,000, dragging altcoins down with it.
15-minute BTC/USDT chart. Source: TradingView.Ethereum lost 4.4% of its market value, dropping to $2,973, while BNB fell 4% ($877), XRP decreased by 1.7% ($1.92), and Solana dropped 2.6% ($128).
Source: CoinGecko.The decline in digital assets coincided with a downturn in the U.S. stock market. The S&P 500 and Nasdaq Composite indices each lost over 2%, while the Dow Jones Industrial Average fell by 1.76%. According to CNBC, this marked the worst session for all three benchmarks since October.
Cryptocurrency companies also faced pressure. Coinbase shares dropped by 5.6%, Circle by 7.5%, and the stock of Strategy, the largest corporate Bitcoin holder, fell by 7.8%.
Analysts attributed the sell-off to leveraged position closures and a challenging macroeconomic environment. Vincent Liu, Chief Investment Officer at Kronos Research, noted that a "risk-off" sentiment triggered a cascade of liquidations.
In just one day, the volume of forced liquidations reached $929.66 million, with $822 million coming from long positions.
Source: CoinGlass.Peter Chang, head of research at Presto Research, identified Japan as the epicenter of market turbulence. A massive sell-off of government bonds triggered a chain reaction, causing the yield on 10-year bonds to spike by 19 basis points in just two days. This is the sharpest increase since 2022, which traders have dubbed "Japanic."
The situation's further development depends on the outcome of the snap elections scheduled for February 8. Chang believes the Bank of Japan may return to quantitative easing.
Andri Fauzan Adziima, a leading researcher at Bitrue, advised monitoring Bitcoin's support level in the $87,000-$88,000 range. A drop below these levels could lead to a decline towards $85,000.
Recall that in January, trading veteran Peter Brandt identified a "death cross" on Bitcoin's chart, predicting a drop to $58,000.