Bitcoin May Hold Support at $98,000 to $85,000 After 21% Market Drop

• Key support at $98,000: Expected to hold as a near-term floor based on technical analysis from experts.

• Broader crypto market cap dips to $3.44 trillion, signaling four-month lows amid liquidations over $2 billion.

• On-chain data shows strong fundamentals with hash rates near all-time highs and $10.7 billion in stablecoin inflows to major exchanges.

Explore Bitcoin support levels from $98,000 to $85,000 after a sharp 21% drop due to dollar strength. Stay informed on crypto market trends and recovery signals—subscribe for expert insights today.

What Are the Key Bitcoin Support Levels After the Recent 21% Drop?

Bitcoin support levels after the recent 21% price drop are identified between $98,000 and $85,000, providing critical buffers against further declines. This range emerges from technical analysis amid a market selloff driven by U.S. dollar strength and liquidity constraints. Investors are watching these zones closely as potential areas for price stabilization and rebounds.

How Is U.S. Dollar Strength Impacting Bitcoin Prices?

The strengthening U.S. dollar has pressured dollar-denominated assets like Bitcoin, contributing to the 21% decline from October peaks. Jiehan Chen, Operations Onboarding Lead Analyst at Schroders, noted that USD strength is a primary driver behind the market-wide price fall. This dynamic often leads to risk aversion, pulling capital from high-volatility assets into safer havens like bonds.

Supporting data from market trackers shows Bitcoin dipping below $100,000 on Tuesday, with an intraday low of $99,110 on Wednesday. The S&P 500 and gold also fell 3% and 10% from peaks, respectively, underscoring a broad-based risk-off sentiment. Tim Sun, Senior Researcher at HashKey Group, emphasized that bonds were the only asset class posting gains, while equities, gold, and cryptocurrencies faced uniform pullbacks.

Short-term funding markets exhibit widening spreads and heightened usage of the Federal Reserve’s Standing Repo Facility. Additionally, the U.S. Treasury’s account balance exceeding $1 trillion has drained liquidity from the financial system. These factors, compounded by the ongoing U.S. government shutdown likely extending through December, amplify uncertainty and fear in the markets.

Frequently Asked Questions

What caused the 21% Bitcoin price drop in recent weeks?

The 21% Bitcoin price drop stems from a combination of U.S. dollar strength, tight liquidity due to Treasury operations, and the U.S. government shutdown. These elements have fostered risk aversion, leading to over $2 billion in crypto liquidations and a market cap fall to $3.44 trillion, per CoinGecko data.

Will Bitcoin recover from its current support levels?

Bitcoin is likely to test support levels around $98,000 before potentially rebounding, according to analysts like Ryan Yoon from Tiger Research, who maintains a long-term target of $200,000. On-chain metrics, including stablecoin inflows and robust hash rates, suggest underlying strength despite short-term sentiment lows on the Fear & Greed Index at 21.

Key Takeaways

• Support Zone Identification: Bitcoin’s key support spans $98,000 to $85,000, offering potential entry points for dip buyers amid the selloff.
• Liquidity Pressures: Tight conditions from Fed facilities and Treasury balances, plus the government shutdown, are exacerbating the decline in risk assets.
• Positive Fundamentals: Despite price action, hash rates hit near-record levels and $10.7 billion in stablecoins signal dry powder for future upside.

Conclusion

The recent 21% Bitcoin drop highlights vulnerabilities tied to Bitcoin support levels from $98,000 to $85,000, influenced by U.S. dollar strength and liquidity tightness. As experts like Tim Sun from HashKey Group and Derek Lim from Caladan point out, while short-term pressures persist, robust on-chain data from platforms like CryptoQuant and Santiment indicate resilience. Investors should monitor these dynamics closely, positioning for potential recovery as market sentiment stabilizes and liquidity eases in the coming months.

Global financial markets experienced a widespread selloff this week, with risk appetite waning across crypto, stocks, and commodities. Bitcoin’s plunge below the historic $100,000 mark on Tuesday mirrored declines in the S&P 500 by 3% and gold by 10% from their peaks. By Wednesday, Bitcoin hit an intraday low of $99,110, reflecting the 21% drop from its October high, according to CoinGecko metrics.

The overall cryptocurrency market capitalization slid to $3.44 trillion, the lowest in four months, while liquidations surpassed $2 billion in digital assets—the second straight day of significant deleveraging. Though network fundamentals remain solid, the pressing concern for market participants is the extent of further downside from current levels.

Ryan Yoon, Senior Research Analyst at Tiger Research, anticipates Bitcoin will defend the $98,000 level and upholds his $200,000 long-term forecast. This correction signals a shift toward risk aversion, as Tim Sun from HashKey Group explained. “Bonds were the sole asset class achieving notable gains, contrasting with pullbacks in Bitcoin, gold, and equities,” Sun stated. He views $85,000 as a robust support area even if pressures continue.

Jiehan Chen from Schroders identified USD strength as a core force in the price downturn, a view shared by other specialists regarding its impact on risk assets. Sun further highlighted distress in short-term funding, with expanding spreads, elevated Fed repo usage, and a Treasury account over $1 trillion siphoning liquidity.

The U.S. government shutdown, poised to prolong into December, heightens these liquidity strains and investor unease. Prediction markets, such as Myriad under Dastan’s ownership, show a 98.7% probability of this shutdown becoming the longest in U.S. history. Derek Lim of Caladan attributed the intensified selloff to these liquidity squeezes.

On-chain indicators paint a balanced view amid bearish sentiment. The Fear & Greed Index at 21 reflects sentiment-driven dips below $100,000, per XWIN Research from CryptoQuant. Yet, key metrics like near-peak hash rates and $10.7 billion in stablecoin inflows to Binance offer potential fuel for rebounds.

Santiment’s on-chain analytics reinforced this, noting via social data that dip-buying persists with optimism. As markets navigate these challenges, the identified support levels provide a framework for assessing near-term trajectories in the volatile crypto landscape.