Bitcoin Plunge Erases Year’s Gains as Key Support Levels Falter

Bitcoin experienced a severe downturn on Tuesday, tumbling below the psychologically significant $90,000 threshold for the first time in seven months. This dramatic reversal has completely wiped out all gains accumulated throughout 2025, leaving market participants questioning whether this represents a temporary correction or the beginning of a more substantial crypto market decline.

Despite the prevailing negative sentiment, several institutional players continue demonstrating confidence in Bitcoin's long-term prospects. Strategy recently acquired an additional 8,178 Bitcoin, representing a substantial $835 million investment that reinforces their commitment to the cryptocurrency. Similarly, Matador Technologies Inc. reported a remarkable 767 percent increase in its Bitcoin holdings since the beginning of the year.

Regulatory developments also offer potential future stability. SEC Chairman Paul Atkins announced the agency's intention to soon present a classification framework for digital assets, a long-anticipated move that could finally clarify the distinction between securities and commodities. Additionally, the U.S. Office of the Comptroller of the Currency confirmed that national banks are permitted to hold crypto assets specifically for paying network fees.

Technical Indicators Flash Warning Signals

From a technical analysis perspective, Bitcoin's chart has formed what traders refer to as a "Death Cross," occurring when the 50-day moving average crosses below the 200-day moving average. This pattern traditionally signals potential further declines. Market analysts have identified the next crucial support level around $89,500, with concerns that a breach of this level could trigger a descent toward the $85,000 zone.

Should investors sell immediately? Or is it worth buying Bitcoin?

More concerning data emerges from on-chain metrics, which reveal substantial selling pressure. Deposits on Binance, the world's largest cryptocurrency exchange, have surged dramatically—an indicator that investors are preparing to sell. The exchange currently holds over 580,000 BTC ready for trading, with more than 5,000 BTC recently transferred to trading platforms. Trading volume of approximately $30 billion appears notably weak compared to earlier yearly peaks, suggesting buyer participation has significantly diminished.

Market Carnage Wipes Trillions

The scale of the market destruction is staggering. Since October's peak above $126,000, Bitcoin has surrendered more than 26 percent of its value. The cryptocurrency briefly plunged to $89,286 before finding modest footing for a minor recovery. The panic has rapidly spread across the entire digital asset market, erasing approximately $1.2 trillion in total market capitalization within just six weeks.

The derivatives market experienced particularly severe damage, with over $1 billion in liquidations recorded. Leveraged long positions bore the brunt of this liquidation event, effectively being wiped out. The Crypto Fear & Greed Index has retreated to a reading of 55, placing it in neutral territory but with distinctly nervous undertones.

Short-Term Reality Remains Challenging

The immediate outlook presents significant challenges. Crypto-related equities including Coinbase and Robinhood suffered substantial declines throughout November. Industry estimates suggest that Bitcoin holdings for approximately half of all publicly traded crypto treasury companies could fall "underwater" if prices remain persistently below $90,000. Bitcoin currently stands at a critical juncture, with market direction uncertain and participants watching closely for the next significant move.