Bitcoin Falls Below $88,000 Amid Stock Market Decline

Bitcoin fell below $88,000, dragging altcoins down with it.

On January 20, the price of the leading cryptocurrency fell below $88,000. Following Bitcoin’s lead, altcoins also plummeted.

Ethereum lost 4.4% of its market value, dropping to $2,973, BNB fell 4% ($877), XRP declined 1.7% ($1.92), and Solana decreased 2.6% ($128).

The decline in digital assets coincided with negative trends in the US stock market. The S&P 500 and Nasdaq Composite indices lost over 2%, while the Dow Jones Industrial Average fell by 1.76%. According to CNBC, this was the worst session for all three benchmarks since October.

Cryptocurrency companies also faced pressure. Shares of Coinbase dropped 5.6%, Circle fell 7.5%, and the stock of the largest corporate holder of Bitcoin, Strategy, declined by 7.8%.

Analysts attributed the sell-off to the closing of leveraged positions and a complex macroeconomic situation. Vincent Liu, Chief Investment Officer at Kronos Research, noted that “risk-off” sentiment triggered cascading liquidations.

In a single day, the volume of forcibly closed positions reached $929.66 million, with $822 million of that in long positions.

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: the yield on 10-year bonds jumped by 19 basis points in just two days. This is the sharpest rise since 2022, which traders have dubbed “Japanic.”

The future course of events depends on the outcome of the snap elections scheduled for February 8. Chang believes the Bank of Japan may return to quantitative easing.

Lead researcher at Bitrue, Andri Fauzan Ajiima, advised monitoring Bitcoin’s support level in the $87,000-$88,000 range. Falling below these marks could lead to a drop to $85,000.

Earlier in January, veteran trader Peter Brandt identified a “death cross” on the chart of the leading cryptocurrency. The expert predicted the coin could fall to $58,000.