Understanding Today's Bitcoin Price Crash

Bitcoin has seen a significant price drop today, falling below the crucial $90,000 mark yet again. This has stirred bearish feelings among investors. Crypto analysts Nik and Doctor Profit share their insights on why this downturn is occurring.

Key Takeaways

Bitcoin's price fell below $90,000 due to algorithmic trading rather than negative news.
The price drop is driven by portfolio rebalancing, not individual traders’ decisions.
Doctor Profit suggests there isn’t enough liquidity for a major crash right now, predicting sideways movement in the near future.
Current Bitcoin trading is around $85,800, down over 5% in the last 24 hours.

Bitcoin

Reasons Behind Today's Bitcoin Price Drop

In a post on X, analyst Nik highlighted that the change in Bitcoin's price wasn't a reaction to bad news. Instead, it was triggered as the "clock flipped," meaning that many algorithmic trading systems executed sell orders simultaneously at the end of the day. Additionally, with a new week and month starting, this rebalancing led to significant market movements.

Nik emphasized that this price crash is not just due to traders making choices but is a result of automatic portfolio adjustments. This means that inventories have been refined, and hedges recalibrated, leading to a reduction in overall market risk. While it may seem like emotional trading, Nik pointed out that the actions taking place are mechanical and guided by algorithms. He also mentioned that retail investors may have panicked and sold their holdings, further exacerbating the situation.

Bitcoin
Source: Chart from Nik on X

Nik noted that time-based algorithms often initiate sell-offs, forcing others to react accordingly, which contributed to today's price fluctuations. The impact of these automatic trades was significant enough to pull down Bitcoin's price, dropping it below the $90,000 level after it had bounced back to $92,000 last week.

Importantly, Nik commented that many traders miss signs of potential price drops because they focus on human-drawn patterns rather than algorithm-driven flows. The market operates in response to both price and time factors.

Insufficient Liquidity for a Major Crash

In a separate post, analyst Doctor Profit remarked that the current liquidity is not adequate to incite a major Bitcoin price collapse. He anticipates sideways trading trends for the coming days, likely fluctuating between the current price and the EMA50, approximately around $100,000. The analyst identified that the short-term liquidity clusters are located at the $97,000 and $107,000 levels.

Despite this, Doctor Profit maintains a pessimistic outlook in the long run. He predicts a downward move is anticipated eventually but insists that the necessary conditions haven't been met yet. As such, he advises traders to brace for a potentially dull sideways market phase, with target prices set between $70,000 and $75,000 by early 2026.

Doctor Profit explained that downward price movements for Bitcoin often require time to play out. He noted that this decline might start with a sharp fall, followed by an extended period of sideways trading, potentially leading to a false rally before continuing toward lower price targets.

At present, Bitcoin is trading around $85,800, reflecting a decrease of over 5% in the last 24 hours, according to CoinMarketCap.

Bitcoin
BTC trading at $86,581 on the 1D chart | Source: BTCUSDT on Tradingview.com