5 Minutes
Overview: BTC Tests Critical $85,000 Support
Bitcoin approached the $85,000 support zone earlier today as a surge in liquidations hit the crypto market ahead of the U.S. jobs report. After trading above $89,000 yesterday, BTC plunged to a low of $85,427 before a modest recovery to roughly $85,798 at the time of writing. The sell-off pushed Bitcoin about 9% below last Thursday’s peak and roughly 32% under its year-to-date high.
Why the Drop? Macro Data and Market Sentiment
U.S. Jobs Report: A Short-Term Volatility Catalyst
Investors entered the trading session cautious ahead of the U.S. nonfarm payrolls release scheduled for 8:30 AM ET. Economists surveyed by Reuters expected a slowdown in job growth for October, with consensus estimates near 55,000 new jobs — roughly half of the prior month’s gain. Because labor-market readings strongly influence Fed rate expectations, any surprise here can quickly shift risk appetite across crypto markets.
Fed Outlook and Rate-Cut Expectations
Market participants are sensitive to the Federal Reserve’s guidance. While slower job growth can reduce inflationary pressure and theoretically increase the odds of earlier rate cuts, the Fed has recently signaled only one cut in 2026 despite a 25-basis-point reduction last week. Cryptocurrencies, particularly Bitcoin, often rally on increased expectations for rate cuts and weaken when the central bank appears hawkish or cautious.
Liquidations, Futures and Derivatives Movements
Mass Liquidations Hit Long Positions
Heightened uncertainty and profit-taking by leveraged traders led to a cascade of liquidations. CoinGlass recorded roughly $653.4 million in total crypto liquidations, with about $576.6 million coming from long positions. Bitcoin accounted for approximately $169 million of those long liquidations alone as traders with leveraged bets were forced out on the rapid decline.
Open Interest and Futures Market Reaction
The liquidation wave coincided with a drop in futures open interest. BTC futures open interest fell about 2% in the past 24 hours to roughly $59.8 billion, a marked decline from the $94.1 billion level seen in early October. Falling open interest can indicate deleveraging across derivatives desks as traders reduce exposure amid higher volatility.
Institutional Flows and ETF Dynamics
U.S. Spot Bitcoin ETFs Seeing Outflows
Institutional demand appeared muted in December. SoSoValue data suggests U.S. spot Bitcoin ETFs recorded net outflows of $158.8 million in December so far, extending a trend from November when these funds shed nearly $3.5 billion. Reduced ETF inflows can remove a stabilizing bid beneath spot prices and intensify downside pressure during risk-off episodes.
Claims of Coordinated Selling
Some market observers have suggested the drop could reflect concentrated selling by large players. A notable social post from market commentator Tracer claimed major entities — including Binance, Coinbase, Wintermute and whale accounts — collectively sold close to $2 billion in BTC, helping to accelerate the decline.
Market Sentiment and Analysts’ Views
Fear Prevails, Opinions Diverge
The Crypto Fear & Greed Index remained in the extreme fear zone, signaling persistent caution among traders and investors. Komodo Platform CTO Kadan Stadelmann warned that Bitcoin could slide toward $75,000 in the short term while still maintaining a longer-term target near $135,000 despite pullbacks. These conflicting views underline the present uncertainty.
Support Levels and Order Flow
Other analysts are more optimistic on near-term technical support. Analyst Ted Pillows flagged substantial buy orders reported on Binance between $80,000 and $85,000, suggesting the $85,000 level could still hold as a structural support zone. If those bids remain intact, they could help dampen volatility and limit further immediate downside.
What Traders Should Watch Next
Key Macro and On-Chain Signals
Traders should monitor several inputs: the actual U.S. nonfarm payrolls print, any follow-up Fed commentary influencing rate-cut expectations, futures open interest, and liquidation metrics. On-chain flows into and out of spot ETFs and whale movements on exchanges are also useful indicators of larger investor behavior.
Risk Management and Volatility
Given the recent leverage-driven liquidations, risk management remains crucial. Traders using futures and margin should reassess position sizing and stop-loss strategies, while long-term investors may view this pullback as an opportunity to dollar-cost average, depending on their risk tolerance and investment horizon.
Conclusion and Disclosure
Bitcoin’s test of the $85,000 support zone reflects a mix of macro uncertainty, waning institutional inflows, and forced deleveraging in derivatives markets. While some analysts warn of deeper downside toward $75,000, others point to concentrated buy orders that could stabilize prices. In any case, volatility is likely to persist until clearer macro signals emerge.
Source: crypto
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