Bitcoin Dips Below $95K as Crypto Market Faces Heavy Selling Pressure

The cryptocurrency market experienced a sharp downturn, with Bitcoin (BTC) plunging below $95,000 on Tuesday. The slide comes amid a broader selloff in digital assets, erasing approximately $200 billion from the market’s valuation within 24 hours, according to CoinGecko.

The selloff follows Bitcoin’s record-breaking surge to $103,800 on Dec. 5, driven by optimism surrounding President-elect Donald Trump’s pro-crypto stance. The pullback highlights the sector’s notorious volatility as traders unwind leveraged positions amid growing caution.

Trump’s Crypto Boom Cools Off

The US election on Nov. 5 had sparked a wave of speculative buying after Trump pledged regulatory reforms favoring the crypto sector, including:

1. A National Bitcoin Reserve: A controversial proposal to hold BTC in the US Treasury.
2. Pro-Crypto Appointments: Trump named a digital asset advocate as the next SEC chairman and introduced a White House czar for AI and cryptocurrency.

While these moves fueled optimism, some analysts believe the rally was overextended.

Sean Farrell, head of digital-asset strategy at Fundstrat Global Advisors, attributed the selloff to “deleveraging across the crypto ecosystem.” Recent liquidations totaled $1.6 billion as over-leveraged bullish bets unraveled, according to data from Coinglass.

Bitcoin’s Volatility Returns

Bitcoin’s struggles to maintain the six-figure level come as traders grow cautious ahead of key economic data. Wednesday’s US inflation report could influence expectations for Federal Reserve rate cuts, which historically impact risk assets like crypto.

Smaller tokens such as Ether (ETH) and Dogecoin (DOGE) also saw steep declines, with a broader index of altcoins shedding as much as 15% — one of its largest intraday drops in 2024.

MicroStrategy and ETF Inflows Provide Support

Despite the downturn, institutional interest in Bitcoin remains strong. MicroStrategy Inc. announced another $2.1 billion BTC purchase on Monday, adding to its growing portfolio of over 400,000 BTC.

Additionally, Trump’s presidency has catalyzed flows into US spot-Bitcoin ETFs, which have seen $10 billion in inflows since his election. However, Fundstrat’s Farrell warns that large purchases like MicroStrategy’s may “implicitly pull a significant spot bid from the market,” leading to short-term price pressure.

What’s Next for Bitcoin?

According to Fairlead Strategies LLC’s Katie Stockton, Bitcoin’s failure to stay above $100,000 signals a period of consolidation. She advises a “neutral short-term bias” until a clearer breakout emerges.

While critics argue that Trump’s pro-crypto agenda may bring increased risks to the financial system, supporters believe his presidency could ignite another bull run by dismantling regulations from the Biden era.

Bitcoin’s retreat below $95,000 underscores the crypto market’s inherent volatility, even amid growing institutional adoption and regulatory optimism. As traders await fresh economic data and the impact of Trump’s crypto-friendly policies, the next few weeks will be critical for determining whether this pullback is a temporary pause or the start of a deeper correction.

Bitcoin Dips Below $95K as Crypto Market Faces Heavy Selling Pressure was originally published in The Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.