Market correction hits as Bitcoin drops 20% from recent peak
Bitcoin has broken below the critical $90,000 support level, dropping to $87,220 as of the latest data from Coin Metrics. This 7% daily decline sent the leading cryptocurrency briefly touching $85,899.99—levels not seen since November. The correction places Bitcoin approximately 20% below the all-time high achieved during President Trump’s January inauguration.
This significant pullback occurs amid broader market uncertainty, with traditional equities also experiencing sustained pressure. The S&P 500 recently recorded a three-day losing streak, struggling to recover from last week’s sell-off as investors navigate concerns about economic slowdown signals and persistent inflation metrics.
Understanding the current market forces
The current downward movement appears driven by multiple converging factors rather than any single crypto-specific event. Steven Lubka, head of private clients and family offices at Swan Bitcoin, explains: “Equities have faced a few difficult sessions over the last week, with top-performing stocks down many times the index, as markets grapple with increased uncertainty under the new administration. This pressure has spilled over into bitcoin and crypto markets.”
This correlation between traditional markets and cryptocurrency highlights Bitcoin’s continued sensitivity to macroeconomic trends despite growing institutional adoption. The absence of immediate positive catalysts, combined with broader market selling pressure, has created what Lubka describes as “an environment for profit-taking and pressure from shorts.”
The selling pressure triggered a cascade of forced liquidations, with centralized exchanges reporting $614.5 million in long position liquidations within a 24-hour period according to CoinGlass data. These liquidation events often amplify market movements as leveraged positions are automatically closed.
Post-executive order market psychology
Bitcoin began 2025 with strong upward momentum, largely fueled by expectations surrounding the Trump administration’s pro-cryptocurrency stance. However, market enthusiasm has faced a reality check since the President’s executive order on cryptocurrency regulation was issued in late January.
While the industry generally received the executive order positively, its language regarding a strategic Bitcoin reserve proved more measured than some speculators had anticipated. This has created what Joel Kruger, market strategist at LMAX Group, identifies as a “sell-the-fact consolidation” phase:
“From November through January, the market was very enthusiastic about pricing in a crypto-friendly U.S. administration,” Kruger noted. “Now it’s a question of waiting for that next catalyst. We know that all of this is in place, and the market is in a bit of a sell-the-fact consolidation as it kind of waits.”
Technical analysis and support levels
The $90,000 level represents the lower boundary of Bitcoin’s trading range since late November 2024. Technical analysts have cautioned that a sustained break below this threshold could potentially trigger a deeper correction toward the $80,000 level.
Despite the current downward pressure, market strategists maintain a constructive longer-term outlook. “There is room for bitcoin still to go back down towards the $70,000 to $75,000 area without doing anything to compromise the outlook,” Kruger explained, “and we suspect that there will be plenty of demand as we head down towards those levels.”
This perspective suggests the current correction may represent a healthy consolidation rather than a reversal of the broader bull market that began in 2023.
Broader market impact
The correction has affected the broader cryptocurrency market even more severely than Bitcoin itself. Ethereum and Solana experienced 8% declines, while the meme coin sector collectively dropped 15.5% according to CoinGecko data.
Particularly hard hit was Libra, which had gained attention last week after brief promotion by Argentine President Javier Milei, tumbling 23% over the past 24 hours. Similarly, the Trump-themed meme coin fell 13% during the same period, demonstrating the heightened volatility in the speculative segments of the market.
Despite the current market turbulence, industry professionals maintain a cautiously optimistic medium-term outlook. Lubka predicts that “bitcoin will finish digesting this move and resume its long-term move higher by mid-March,” suggesting the current correction could be relatively short-lived.
Key takeaways for investors
- Market context: Bitcoin’s correction is occurring alongside broader equities market weakness rather than crypto-specific negative news.
- Technical levels to watch: The $80,000-$85,000 range now represents immediate support, with stronger buyer interest potentially emerging around $70,000-$75,000.
- Catalyst timeline: The market may remain in consolidation until new positive catalysts emerge, with mid-March suggested as a potential turning point.
- Risk management: The heightened volatility in alternative cryptocurrencies compared to Bitcoin highlights the importance of risk calibration during market corrections.
While short-term volatility continues, the fundamental thesis for Bitcoin’s growth remains intact as the market digests recent gains and awaits the next phase of regulatory development under the Trump administration.
