Bitcoin at $92,000: Why did the crypto market crash?

Cold Macroeconomic Shower: The Fed Won’t Budge

The crypto market is starting the week on an extremely cautious note, directly impacted by the latest macroeconomic projections. While investors were heavily betting on imminent monetary easing, recent data suggests a far less accommodative scenario. The probabilities that the Federal Reserve (Fed) will keep its rates unchanged in January and March have surged, triggering an immediate shockwave across risk assets.

This prospect of elevated rates for an extended period (“Higher for longer”) mechanically strengthens the dollar (DXY) and bond yields, to the detriment of non-yielding assets like cryptocurrencies. This sentiment reversal has triggered an almost instantaneous bearish movement, with traders adjusting their positions to hedge against a tighter liquidity environment than anticipated.

For traditional markets, this news appears to have been digested with a certain composure, but the crypto industry is bleeding. The correlation between US central bank decisions and Bitcoin volatility remains extremely strong. The absence of a bullish monetary catalyst is forcing whales and institutions to reduce their exposure, creating selling pressure across the entire order book.

The charts’ reaction was swift. Bitcoin (BTC), the market leader, saw its price stumble to $92,000, dragging down all altcoins in its wake. Ethereum (ETH) and XRP, particularly watched by retail traders, are posting significant losses, breaking through several technical support levels that seemed solid just last week. This movement resembles a classic post-euphoria retracement, but the magnitude of the decline is concerning.

The Trump Effect: Greenland Shakes Global Finance

The other cause is macroeconomic and, to say the least, surprising. President Donald Trump threatened this weekend to impose tariffs of 10% to 25% on several European countries if they didn’t cooperate on the… Greenland issue. This aggressive rhetoric immediately triggered a Risk-off movement in traditional markets, dragging cryptos down with it.

Institutional investors, who had massively invested through ETFs in recent weeks, appear to have taken fright at this resurgence of transatlantic tensions. The “Bitcoin as safe haven” narrative is temporarily undermined by this direct correlation with stock indices, which are also declining. If these threats materialize in February, selling pressure could intensify, transforming this healthy correction into the beginning of a short-term bearish trend.

Bloodbath: $860 Million in Liquidations in 24 Hours

It’s a veritable massacre for bullish traders. In the span of a single day, volatility swept through the market, triggering the liquidation of more than 240,000 traders. According to Coinglass data, total losses amount to approximately $864 million, with the vast majority (91%) involving Long positions (betting on price increases).

This violent movement resembles a classic Long Squeeze but of rare intensity. Bitcoin (BTC), which was still trading close to $98,000 just a few days ago, sharply dropped to test the $91,800 zone. Ethereum (ETH) hasn’t been spared, falling nearly 5% to dangerously approach $3,100. This cleanup of Open Interest could cleanse the market, but for now, investor psychology has shifted to extreme Fear.

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