BTC lost support at $85,000—where is the next turning point?

A major fluctuation occurred in the cryptocurrency market in late January. BTC broke below the critical level of $85,000, and the previously considered “bottom” support at $86,000 was completely lost. Within just 24 hours, large-scale position liquidations took place, spreading anxiety across the entire market. According to the latest data, BTC is currently trading around $65,530, reflecting a decline of approximately 22.9% from $85,000.

This rapid correction is driven by multiple complex factors. It is not merely a short-term technical reaction but the result of fundamental market conditions, macroeconomic factors, and geopolitical risks all surfacing simultaneously.

Overall Market Adjustment: Chain Reaction of Declines Continues

The decline in late January was not limited to BTC. Major altcoins also experienced coordinated adjustments. Top-tier tokens like Ethereum, Solana, and Dogecoin fell over 6%, while projects like Filecoin and Cardano saw nearly 7% drops.

The entire crypto market entered a collective correction phase. This indicates more than just a technical rebound; it suggests a shift in market participants’ sentiment. Interestingly, this decline also spilled over into traditional financial markets. US crypto-related stocks fell simultaneously, with ETF providers and similar companies experiencing declines of over 9%.

Technical Signal of a Reversal: The Dead Cross Indicates Bearish Momentum

Why is losing $85,000 and $86,000 so significant? The reason lies in technical analysis. This price zone is not just psychological resistance; it coincides with the intersection of the 21-week exponential moving average (EMA) and the 50-week EMA.

Breaking below this level has generated a major bearish signal. Known as a “dead cross” in technical terms, it indicates that short-term bullish momentum has shifted to a long-term bearish trend. Since 2023, such a clear bearish signal is rare, marking the market’s official transition into a defensive correction phase.

Multiple Risk Factors: Simultaneous Capital Outflows and Macro Pressures

Several key risk factors underpin this market correction.

First, capital is rapidly flowing out of crypto assets. Major stablecoin companies, including Tether, announced plans to allocate 10-15% of their reserves into physical gold. At the same time, the world’s largest gold ETF holdings have reached their highest levels in four years, showing investors are shifting from crypto to traditional safe-haven assets. Over the past week, more than $1.3 billion has been withdrawn from Bitcoin-related funds, and this outflow continues. On-chain analysis indicates most BTC holders are now in a loss position, with large-scale sell-offs occurring for the first time since 2023.

Second, macroeconomic and geopolitical risks are exerting dual pressure on the market. The Federal Reserve’s interest rate policy outlook remains uncertain, with expectations of a significantly slower pace of rate cuts. This raises risk-free rates and diminishes the relative attractiveness of high-risk assets like BTC. Meanwhile, rising geopolitical tensions in the Middle East hinder BTC’s role as “digital gold,” prompting investors to flock to gold and silver instead.

Third, regulatory uncertainty is increasing caution among institutional investors. Legislation expected to clarify crypto regulations has been repeatedly delayed, reducing the likelihood of passage. Support from major exchange executives has waned, and the ambiguous regulatory environment discourages large-scale buying by institutions. While they remain optimistic about long-term value, they are refraining from expanding positions in the short term and are instead hedging with options, further weakening market support.

Support Levels Analysis: Where Is the Next Turning Point?

After losing the $85,000 support, market focus shifts to the next support levels.

Key support for BTC lies between $81,000 and $84,000. This range corresponds to the November 2024 lows and aligns with the 50-day moving average. It also coincides with a significant Fibonacci retracement level, suggesting a potential rebound here. Current options trading volume has increased by 35% compared to previous levels, indicating a possible bottom in this zone.

If support at $81,000 fails, the next strong support is around $75,000, where substantial options positions are concentrated. Historically, this level has supported BTC multiple times. Breaking below it could target the $70,000 level, which has also been a critical support historically. Statistically, after losing key support, BTC typically experiences an 18-20% correction, matching the decline from $86,000 to $70,000, which aligns with this typical adjustment range.

Long-Term Outlook and Short-Term Strategies: How to Respond

However, there is no need for excessive pessimism. Positive signals are also present.

The deleverage process in Q4 2024 has significantly reduced overleveraged positions. Currently, institutional investors are increasingly prioritizing long-term position building over short-term selling. Industry reports suggest BTC is transitioning into a more stable and resilient phase. Long-term valuation remains unchanged.

Additionally, upcoming upgrades for Ethereum and the legalization of crypto ETFs in Japan are structural positive developments. Though these are overshadowed by short-term anxiety, they are likely to shine once the market stabilizes.

Investor Advice: Lessons from the $85,000 Level

In the current environment, avoiding blind bottom-fishing and panic selling is crucial.

Investors holding positions should control their size, avoid high leverage, and set reasonable stop-losses to prevent further losses. Observers should refrain from rushing into the market and wait for clear signs of rebound at support levels like $81,000, $75,000, and $70,000 before gradually re-entering positions.

Crypto market cycles repeat. Panic and optimism alternate, causing psychological swings among participants. The key is to survive these cycles and focus on long-term value. Losing the $85,000 level indicates the market has entered a new phase. Regardless of future developments, staying calm, cautious, and strategic is essential for success.

How do you view this market correction? Is now the time to hunt for the bottom, or should we wait for further declines? Share your thoughts in the comments.

Disclaimer: The content of this article is for informational purposes only and does not constitute investment advice. Investors should carefully assess their risk tolerance and investment goals before engaging in crypto investments and avoid blindly following market trends.