Bitcoin stuck at a critical level: survival rules in the midst of intense volatility in the crypto market

Current Situation: A Severe Drop from $126K to $96K

Bitcoin is undergoing a “reality check.” From its all-time high of $126,000 last October to the current dip of $96.27K, this 20% decline has not only shocked the market but also prompted countless investors to reevaluate their holdings strategies. The current price has repeatedly approached the psychological barrier of $100,000 but has yet to stabilize above it.

The real danger lies in the $97,500-$99,000 range, which is becoming a “life-and-death” battleground. Technical indicators show Bitcoin has broken through several key support levels, typically signaling that buying interest in the market is waning. The Fear & Greed Index has already fallen to a “Extreme Fear” level of 21, which in itself says everything — when the market is in extreme pessimism, it is often the most dangerous time.

Why is it falling? The macroeconomic “invisible hand”

This decline didn’t happen out of nowhere. The underlying reasons trace back to several key global economic variables:

Geopolitical uncertainties still cast a shadow over the market. The ongoing escalation of US-China trade tensions creates an environment where global investors prefer to flee to safe assets. When the macro environment is full of variables, cryptocurrencies, as high-risk assets, are among the first to be sold off.

The Federal Reserve’s policy shift is another heavy weight on the crypto market. Rising interest rates and tightening liquidity directly impact all risk assets. Compared to stocks, the crypto market, with its higher volatility and relatively lower liquidity, suffers even more.

These macro factors create a stark reality: the correlation between crypto markets and traditional financial markets is increasing, no longer being “independent safe havens,” but rather becoming “the riskiest of risk assets.”

Other cryptocurrencies are also not spared

While all eyes are on Bitcoin, the contagion has spread across the entire crypto ecosystem:

Ethereum has fallen 16% in 48 hours, though its decline has slowed to -1.37% in the past 24 hours, but it remains under pressure in the long term. As the infrastructure of DeFi ecosystems, Ethereum’s difficulties directly reflect a crisis in the entire on-chain application layer.

Solana is even more tragic, with a 30-day rebound of +11.68%, but this is after a wave of decline. In fact, Solana has dropped over 19% during this correction, making it a major casualty.

Smaller tokens are even more dire. Although Layer 2 solutions like Arbitrum and Base have technically addressed Ethereum’s scalability issues, in a highly pessimistic market, technical advantages are completely overshadowed by market sentiment.

ETFs and institutions: from “big investors” to “big sellers”

Ironically, institutional investors, once seen as Bitcoin’s “moat,” have also been retreating. Bitcoin spot ETFs recorded over $200 million in net outflows in early November, which has directly intensified downward pressure.

While institutional adoption remains a long-term positive, short-term outflows are indeed adding fuel to the fire. This indicates that even “professional players” are feeling panic during this correction.

Market self-rescue: the comeback of stablecoins

Whenever the market is in extreme panic, stablecoins become investors’ “safe haven.” During this decline, net inflows into stablecoins like USDT and USDC have increased significantly. This phenomenon has a dual meaning: on one hand, it shows investors are panic-selling; on the other, it indicates they are still waiting for a “bottom-fishing” opportunity.

The “exposure moment” for DeFi and NFTs

Decentralized Finance and NFT markets have exposed many weaknesses during this storm:

DeFi protocols have experienced large-scale liquidations, triggering chain reactions that cause liquidity crises. When markets fluctuate violently, risk management mechanisms of these protocols often fall short.

NFT trading volumes have also shrunk significantly. From last year’s boom to today’s coldness, what the NFT market lacks most is not technology but “market sentiment.”

Will history repeat itself? Three hypotheses about a rebound

This isn’t Bitcoin’s first experience with declines over 20%. Historical data shows that crypto markets often generate rebounds amid extreme pessimism.

For the next 6-12 months, analysts’ target price ranges from $120,000 to $170,000. These targets are based on several assumptions:

1. Institutional demand rebounds: Once sentiment stabilizes, withdrawn institutional funds will flow back in
2. Macroeconomic conditions improve: Easing trade tensions or policy adjustments
3. Technological infrastructure upgrades: Continued optimization of Bitcoin and Ethereum ecosystems

But it must be acknowledged that these are only assumptions. Bitcoin’s current situation is a true reflection of this market — full of uncertainty.

The dual nature of regulation

Recent regulatory developments seem to be moving toward “standardization.” Strict regulation may cause short-term uncertainty, but in the long run, a clear regulatory framework can bring stability and legitimacy to the market.

Cold reflections for investors

Whether driven by panic or optimism, the most important thing now is to recognize the facts:

The crypto market is transitioning from “wild growth” to “mechanism improvement,” a process that inevitably involves intense volatility. The current decline is both a risk and a reveal of the market’s fragility — highly dependent on sentiment, easily influenced by macro factors, and liquidity can dry up in extreme conditions.

For long-term investors, the current extreme pessimism might be an opportunity. But for short-term traders, caution is always the top priority. The direction of the $97,500-$99,000 range will largely determine the market’s next rhythm.

Risk Warning: Cryptocurrency assets are highly volatile and risky. Before making any investment decisions, thoroughly assess your risk tolerance and consult professionals if necessary. Past performance does not guarantee future results.