Bitcoin has slipped below the critical $90,000 mark, hitting a three-month low as broader market uncertainty weighs on crypto. The leading digital asset fell 7% to $86,915.13, with an intraday low of $86,128.21, according to Coin Metrics. This drop puts Bitcoin 20% off its all-time high, reached on President Donald Trump’s inauguration day.

Equities Sell-Off Spills into Crypto

Market volatility in equities has spilled over into the crypto sector, amplifying selling pressure. Steven Lubka, head of private clients at Swan Bitcoin, noted that “equities have faced a few difficult sessions,” with top-performing stocks suffering significant losses. Concerns over a slowing economy and persistent inflation have kept traditional markets on edge, dragging Bitcoin and other digital assets down.

The S&P 500 extended its three-day losing streak on Monday, struggling to recover from last week’s downturn. Without a clear short-term catalyst, many traders have opted for profit-taking, exacerbating downward momentum in Bitcoin.

Liquidations Mount as Traders Exit Positions

Bitcoin’s rapid descent triggered a surge in long liquidations, forcing traders to sell assets at market price to cover their positions. Data from CoinGlass shows that centralized exchanges saw $614.5 million in long liquidations over the past 24 hours.

The sell-off has been broad-based, with other major cryptocurrencies also taking a hit. Ether and Solana’s SOL both dropped 8%, while the meme coin sector suffered a staggering 15.5% loss. Libra, which gained attention last week after Argentine President Javier Milei mentioned it, tumbled 23%, and the Trump meme coin slid 13%.

Waiting for the Next Catalyst

Bitcoin’s bullish momentum earlier in the year was fueled by optimism surrounding the new Trump administration’s crypto policies. However, after Trump’s executive order on digital assets in late January—while well-received—failed to deliver any game-changing regulations, the market has been left waiting for its next major driver.

Joel Kruger, a market strategist at LMAX Group, believes that Bitcoin is currently in a “sell-the-fact” phase, consolidating as traders await fresh developments. Analysts caution that if Bitcoin breaks below the $90,000 support level, a further decline toward $80,000 or even $70,000–$75,000 remains a possibility.

Long-Term Outlook Remains Strong

Despite the short-term turbulence, market watchers remain confident in Bitcoin’s long-term trajectory. Lubka expects Bitcoin to stabilize and resume its upward trend by mid-March. With growing institutional adoption and expectations of favorable regulatory changes, many see the current downturn as a temporary pullback rather than a prolonged bear trend.

Bitcoin (BTC) has remained largely stagnant this month, trading within a narrow range of $95,000 to $100,000. However, this hasn’t stopped traders from placing bullish bets on BTC options, with a strong focus on the $110K call expiring on March 28.

According to Deribit options flow tracked by Amberdata, traders have spent over $6 million on this call option, signaling optimism despite market sluggishness.

Traders Favour $110K Call Options

A call option gives its buyer the right (but not the obligation) to purchase BTC at a predetermined price before the expiry date. Buying calls indicates a bullish outlook, while put options reflect a more defensive stance.

Greg Magadini, director of derivatives at Amberdata, noted that buying the March $110K calls has been the most popular trade so far this month.

Mixed Signals: Institutional Buys vs. Macroeconomic Pressures

Bitcoin bulls have drawn confidence from several key developments:

• MicroStrategy continues accumulating BTC, maintaining its aggressive investment strategy.
• Abu Dhabi announced a $436 million investment in Bitcoin ETFs, further supporting institutional adoption.

However, broader macroeconomic headwinds have limited BTC’s upward movement. Hotter-than-expected U.S. inflation data last week raised concerns about tighter monetary policies, potentially capping Bitcoin’s rally.

Memecoin Volatility Adds to Market Uncertainty

Adding to the uncertainty, the boom-bust cycles of memecoins have introduced fresh volatility. Over the weekend, a token called LIBRA surged to a $4 billion market cap before collapsing by 90% within minutes. The token’s brief success was fueled by a promotion from Argentina’s President, Xavier Milei, who later backtracked, sparking controversy and legal challenges.

Magadini pointed out that such events, combined with the growing supply of altcoins, have kept BTC trading sideways with lower volatility.

What’s Next for Bitcoin?

While bullish traders continue to bet on a breakout, BTC’s near-term price action remains uncertain. The combination of institutional investments, macroeconomic pressures, and memecoin market turbulence suggests that Bitcoin might stay range-bound unless a major catalyst shifts momentum.

With March $110K call options leading the trading activity, the next few weeks will reveal whether BTC finally makes a move or continues its sideways drift.

The U.S. Consumer Price Index (CPI) for January came in hotter than expected, rattling both traditional and crypto markets. The headline inflation rate climbed 0.5% for the month, exceeding forecasts of 0.3%, while the year-over-year figure stood at 3.0% versus 2.9% expected. The core CPI, which strips out food and energy costs, also surged, rising 0.4% month-over-month compared to an expected 0.3%.

The data dashed hopes of early Federal Reserve rate cuts, sending asset prices tumbling across the board. Bitcoin (BTC), which had already been trending lower this week, plunged below $95,000 following the report.

Bitcoin’s Steady Range Faces Fresh Pressure

Since its post-election rally past $100,000 in November, Bitcoin has remained locked in a range between $90,000 and $109,000. However, persistent inflation concerns, AI-driven economic risks from China, and the looming threat of trade wars have weighed on market sentiment.

The latest inflation print raises the risk of prolonged high interest rates, which could put further pressure on risk assets, including Bitcoin. Federal Reserve Chair Jay Powell, in his testimony before Congress, signaled that rate cuts remain unlikely for now, barring significant economic deterioration.

Traditional Markets Feel the Heat

The inflation surprise triggered a broad market sell-off. U.S. stock index futures dropped 1%, while the 10-year Treasury yield surged 10 basis points to 4.63%, reflecting expectations of tighter monetary policy. Meanwhile, gold slipped more than 1%, and the U.S. dollar index rose 0.5%, indicating investor flight to safety.

Bitcoin, often seen as a hedge against inflation, failed to hold ground, suggesting its correlation with traditional markets remains strong.

Outlook: Is a Retest of $90K on the Cards?

With inflation proving sticky and the Fed maintaining a hawkish stance, traders may start pricing in the possibility of rate hikes in 2025 rather than cuts. If macroeconomic headwinds persist, Bitcoin could be at risk of retesting the $90,000 level in the near term.

For now, all eyes remain on upcoming economic data and central bank commentary, which could dictate Bitcoin’s next major move.