Bitcoin Drops Below $90K — What Caused It, and What Comes Next?

Why Bitcoin Fell Below $90K

Bitcoin’s move under $90,000 was primarily caused by a cascade of long liquidations. With heavy leverage built up, a small price dip triggered stop-losses and forced selling, accelerating the move. The timing was also influenced by traders reducing risk ahead of the U.S. Core PCE inflation report, which typically causes volatility. With liquidity still relatively tight, even moderate selling pressure quickly snowballed, pulling BTC into the high $89Ks.

Inflation Cools and Macro Turns Bullish

The bearish move was short-lived. Moments after the drop, Core PCE came in at 2.8% versus the expected 2.9%, confirming that inflation continues to slow. Rate-cut expectations strengthened, with Morgan Stanley anticipating a 25 bps cut in December and White House advisor Kevin Hassett urging the Fed to begin easing. 

At the same time, quantitative tightening officially ended, marking a major shift in liquidity conditions. Historically, every Bitcoin bull run has coincided with liquidity expansion rather than contraction.

Liquidity Returns: Stablecoins and Institutional Demand

A $500 million USDC mint signaled new capital preparing to enter the crypto market, a classic precursor to renewed upside momentum. Institutions also stepped in aggressively: BlackRock deposited more than $120 million in BTC into Coinbase Prime, Vanguard enabled Bitcoin ETF access for 50 million clients, and JPMorgan and Goldman Sachs expanded crypto exposure through new products and acquisitions. 

USDT dominance is beginning to decline as capital rotates out of stablecoins and back into risk assets, reinforcing the shift toward a more supportive liquidity environment.

What Comes Next for Bitcoin

If Bitcoin holds above $90K, the next key levels are $92.5K, $95K, and the psychological $100K zone. The drop increasingly resembles a liquidity flush rather than a structural breakdown. Should BTC retest the lows, support remains at $88K and $86.5K, but the macro backdrop — cooling inflation, rising stablecoin liquidity, QT ending, and institutional accumulation — suggests higher probability of recovery than continued downside. 

Bitcoin did not fall because fundamentals weakened, but because leverage unwound at the exact moment the macro environment turned bullish.