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Bitcoin plunged below the $85,000 mark during intraday trading, shaking sentiment and triggering heavy liquidations across crypto exchanges. This move pushed prices down nearly 6%, marking one of the sharpest short-term corrections in weeks. The sell-off intensified over the weekend, when it briefly fell below $80,000 after Kevin Warsh was confirmed as the next chair of the Federal Reserve.
Analysts linked the drop to widespread deleveraging. Derivatives data showed more than $320 million in crypto positions liquidated within 24 hours. Bitcoin accounted for most losses, with long positions making up over 80% of wiped-out trades.
Liquidations forced exchanges to close leveraged positions as margin levels failed. Selling pressure then increased, pushing prices lower and driving further volatility across markets.
So why did leverage unwind so quickly once key support levels broke?
Funding rates had risen during the recent rally, signaling heavy long positioning across derivatives markets. As prices slipped, those positions unwound rapidly and accelerated downside momentum. QCP Asia reported that the weekend sell-off led to roughly $2.5 billion in liquidations of leveraged long positions. The firm said bitcoin fell into a mid-cycle support zone after breaking technical levels.
Ether also declined to lower thresholds during the same period. Futures margin requirements rose, which further pressured traders to reduce exposure.
At the same time, U.S. spot Bitcoin exchange-traded funds continued to record outflows. Those redemptions added to selling pressure as liquidity tightened across venues.
Risk aversion extended beyond digital assets after the Warsh announcement. Equity markets weakened, while gold and silver pulled back from recent highs. According to QCP Asia, traders began pricing in a higher probability of earlier policy normalization under a Warsh-led Federal Reserve. That shift weighed on non-yielding assets.
Higher yields and tighter conditions create pressure on speculative markets. The market experienced immediate adjustments of leveraged crypto positions when investors started to show caution. The sell-off led to minimal movement by long-term bitcoin holders, according to on-chain data. Recent market activity was driven mainly by short-term traders, according to analysts.
Bitcoin has reached a stable price that exceeds the year's previous cycle low. Traders now monitor support near $82,000 and $80,000. The options markets are displaying cautious behavior because traders are protecting their positions with put options. QCP Asia reported a decrease in demand for downside hedges, which has now fallen below levels seen during previous periods of market stress.
During the November decline from peak levels, hedging activity appeared more aggressive. Current positioning suggests some exposure already cleared during recent moves. Momentum indicators still point to lower levels, according to QCP Asia. Upside remains limited near resistance, leaving prices vulnerable if support levels fail.
Read More: Bitcoin Price Today Falls to $76,848 as Market Faces Heavy Selling Pressure
Bitcoin fell below key price levels as heavy liquidations swept crypto markets. Leveraged long positions unwound quickly amid ETF outflows and shifting Federal Reserve expectations. While prices stabilised near support, derivatives and options data show continued caution, leaving Bitcoin sensitive to further macro and liquidity-driven moves.
