Bitcoin drops below $86,000, approaching the lowest point of the year, with crypto-related stocks also under pressure

According to Bloomberg, Bitcoin prices fell below the $86,000 mark for the first time in two weeks, indicating increasing downward pressure in the market. On Monday, Bitcoin dropped as much as 3.7%, touching a low of $85,171, before rebounding slightly to above $86,000 during early Asian trading on Tuesday. Overall, Bitcoin has retreated about 30% from its previous all-time high of over $126,000, with investor sentiment clearly weakening.

Analysts point out that Bitcoin has recently been approaching the lower end of its previous trading range. Each rebound encounters selling by investors who entered near historical highs in early October, creating noticeable resistance above. FalconX senior derivatives trader Bohan Jiang stated that Bitcoin is currently experiencing intense volatility between $85,000 and $94,000, with overall trading interest in the crypto market remaining low and trading volume staying subdued.

Notably, Bitcoin has declined in tandem with other risk assets over the past few weeks but has not experienced the same significant rebounds as some risk assets. This trend breaks Bitcoin’s previous correlation pattern. Analysts believe that even after the Federal Reserve cut interest rates last week, the market’s liquidity remains weak and risk appetite has declined, continuing to exert downward pressure on crypto assets.

From a market structure perspective, this recent decline differs from the sharp drops caused by forced liquidations earlier. Chris Newhouse, head of research at decentralized finance research firm Ergonia, pointed out that this correction is mainly driven by adjustments in spot and derivatives positions rather than large-scale liquidations. Relatively mild liquidation data suggest that highly leveraged positions have been largely cleared, but this could lead to more sustained and slower-paced selling pressure.

Despite the market’s pressure, some institutions are still increasing their holdings against the trend. Strategy Inc., led by Michael Saylor, bought Bitcoin for the second consecutive week, investing nearly $1 billion in a single week. The company mainly raised funds through issuing Class A common stock and selling some perpetual preferred shares, but this approach has also sparked controversy over equity dilution and valuation premiums.

While Bitcoin weakens, other major cryptocurrencies have fallen even more. Ethereum, Dogecoin, and Ripple (XRP) all declined about 5% on Monday, with crypto-related stocks also under pressure. Strategy’s stock price dropped over 9%, and COIN fell about 7%. The market is widely watching whether Bitcoin will test this year’s low of approximately $74,400 set in April.