Bitcoin falls below $90,000 amid weak cryptocurrency demand

Bitcoin returned to the lower end of its recent trading range amid continued concerns about demand for risky assets. The native cryptocurrency fell below $90,000 for the first time in two days, retreating as much as 3.4% in New York on Thursday. Bitcoin has traded in a loosely defined range of between $95,000 and $85,000 over the past month. Smaller tokens also retreated, with Ether losing as much as 5.8% of its value.

“The market is testing the strength of the modest uptrend that has formed since Nov. 21,” Alex Kuptsikevich, chief market analyst at FxPro, said in a note Thursday. “A drop below $88,000 would break this trend, strengthen bearish sentiment and confirm the end of the recovery rally.” The crypto market is in a weakened position after a weeks-long sell-off that began with a major liquidation in early October, wiping out about $19 billion in leveraged bets. Asian stocks followed gains on Wall Street on Thursday morning after US Federal Reserve Chairman Jerome Powell cut interest rates by a quarter of a percentage point, but the move did little to improve the mood among crypto traders.

Anticipation of the rate cut helped the S&P500 rise 0.7% in New York on Wednesday, posting the biggest gain on a Fed decision day since March and closing just short of a record high. However, the index fell in early trading on Thursday on renewed concerns about an AI bubble. “It’s a clear disconnect,” said Sean McNulty, APAC derivatives trading leader at FalconX, adding that $85,000 would be a “critical line in the sand.”

Traders are now faced with a mixed picture in terms of technical indicators about where the market is headed.

On Wednesday, US exchange-traded funds investing in Bitcoin saw net inflows of $224 million, led by $193 million for BlackRock’s iShares Bitcoin Trust – the highest in 30 days. Strategy Inc., the Michael Saylor-led Bitcoin Treasury company, acquired 10,624 tokens worth $962.7 million between December 1 and 7, marking its largest acquisition since July. Still, Bitcoin’s largest corporate holder’s purchase failed to keep the token’s price above $94,000, “confirming that demand is being overwhelmed by structural selling,” McNulty said.

Bitcoin perpetual futures contracts, which account for the majority of crypto trading volume, are showing a pessimistic trend, with funding rates turning negative during Asian hours, meaning bearish traders are now paying bullish counterparts to maintain short positions, according to data from CryptoQuant.

While Bitcoin has recovered from a “capitulation low” of $80,537 in recent weeks, IG Australia analyst Tony Sycamore said the token is at risk of “a price drop and a retest and breakout” of that level.