Bitcoin breaks below 90k – Why is BTC tanking and how low can it go?

Bitcoin's falling further, down 25% from its record high of 126.2k at the start of October, dropping to a low of 89.1k today, a level last seen in April. The largest cryptocurrency has fallen in seven of the past eight sessions, a losing streak that has left it trading in the red for 2025. 

The selloff has not been confined to BTC; altcoins are also tanking. Ethereum trades 4% lower over the past 24 hours, dropping towards $3000, while SOL and XRP are down over 3% across the same period. 

The selloff in the crypto space has wiped out over $1 trillion from the total crypto market capitalisation in little over a month. The market cap now sits at $3.13 trillion. 

Why is crypto plunging? 

The market remains fragile following the massive October 10 record liquidation event, which continues to reverberate through the crypto markets. This, combined with concerns over the macro picture in the US, worries over lofty AI and tech valuations, and uncertainty about the Fed’s path for interest rates, is keeping pressure on crypto. 

Recent Fed speakers have adopted a more hawkish stance, prompting markets to rein in rate-cut expectations for next month. The market sees less than a 50% probability that the US central bank will cut again in December, down from 67% just a week ago, according to the CME Fedwatch tool. High-beta assets, such as Bitcoin, perform better in low-interest-rate environments. 

This means that attention will be firmly on tomorrow’s non-farm payroll report for September. This could be a crunch moment for the market, which has been without key data releases due to the (now resolved) US government shutdown. If the data shows the labour market has remained resilient, it would strengthen the case for the Fed to keep rates unchanged, which could drag crypto prices lower. 

Institutional outflows & LTHs add pressure 

Institutions continue to sell. BTC ETFs recorded outflows of $254 million on Monday, after outflows of $2.5 billion across the previous two weeks. Meanwhile, on-chain data also shows that long-term holders have been selling out and whales have also been cashing in.  

How low can BTC go? 

 Pressure on crypto could persist unless the Fed’s interest rate path becomes clearer. For now, the market is repricing the prospect of fewer Fed rate cuts and higher treasury yields, and demand is weak.  

Binance Exchange Reserves have exceeded 580,000 BTC, and high exchange reserves often signal increased selling pressure, especially when demand is weak, as it can’t absorb the increased supply. The price needs to drop low enough to encourage accumulation by long-term holders, whales, and institutions to stand a chance of a descent recovery. 

BTC technical analysis 

After reaching a record high of 126.2k in early October, BTC/USDT has trended lower. The price is testing the lower band of its descending channel, falling to a 7-month low of 89.1k. The 50 SMA has crossed below the 200 SMA in a death cross signal. The RSI is overbought, so sellers should be cautious at these levels. There could be some consolidation. 

Sellers will look to extend the breakout below 90k towards 85k, the 78.6% Fib retracement of the 76.6k low to the 126.2k high. A break below here opens the door to 76.6k, the 2025 low.  

The long lower wick on today’s candle suggests that selling demand at the lower levels was weak, which could be an encouraging sign for buyers. Any recovery would need to rise above 95k, the 61.8% Fib retracement, to bring 100k, the key psychological level, into focus. A rise above 100k could negate the downtrend and bring 107k, last week’s high, into focus. 

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