$1.5 billion settlement storm! Bitcoin drops below 90,000, wiping out all gains in 2026

Bitcoin falls below the $90,000 psychological threshold, erasing all gains since 2026. Over the past 48 hours, liquidations have exceeded $1.5 billion, and bulls have surrendered. Turmoil in the Japanese bond market has triggered a global liquidity crunch, with whales depositing $400 million into exchanges, and spot ETFs experiencing outflows of $900 million over two days. The key support level of $89,800 to $90,000 marks the dividing line between bulls and bears.

$1.5 Billion Liquidation Cascades Bulls’ Defense Line

On January 22, Bitcoin’s price briefly rebounded but still struggled near $90,000. The overnight drop marked a decisive breakdown, effectively wiping out all gains made in early 2026. According to CryptoSlate data, Bitcoin plunged to a low of $87,282 within the past 24 hours.

This decline was not an isolated event but part of a market-wide sell-off, causing severe impacts on the digital asset ecosystem. Major altcoins like Ethereum, Ripple, Cardano, and Solana also fell sharply, moving in tandem with the leader’s decline. Meanwhile, this sharp reversal marked the peak of a brutal two-day downturn, pushing prices back to their lowest levels since late 2025 and crushing the rally that had been underway since the start of the new year.

While price corrections are common in crypto markets, the speed of this decline indicates a combined effect of derivatives liquidations and genuine supply shocks, leading to serious consequences. The futures market most clearly reflected this rapid decline, with “liquidation cascades” (price drops triggering forced sales, further driving prices down) accelerating the fall.

Data from CoinGlass shows the extent of losses. Over the past 48 hours, traders holding long positions (betting on price increases) lost over $1.5 billion. This figure represents a capitulation of bulls who aimed to break $100,000 but ultimately failed as Bitcoin couldn’t hold support above $90,000.

The mechanics of liquidation cascades are extremely brutal. When prices start falling, highly leveraged long positions are forced to close first, generating selling pressure that further depresses prices, triggering the liquidation of the next tier of slightly less leveraged longs. This chain reaction can cause tens of billions of dollars in losses within hours, often before traders can react. While a $1.5 billion liquidation scale is not uncommon in crypto history, each occurrence severely damages market confidence.

Spot Selling and Whale Outflows Double Blow

(Source: CryptoQuant)

However, this price drop was not solely driven by excessive leverage speculation. Unlike the quickly snapped-up “scam stocks,” this decline was supported by active spot market (actual asset trading) selling. CryptoQuant’s “Net Trading Volume” is a key indicator measuring market aggressiveness, tracking whether traders are net buyers or sellers. On January 20, this indicator showed a negative value of -$319 million.

This highly negative figure indicates active sellers are aggressively exiting their positions, leading to insufficient available liquidity. Notably, this is the second time recently that the indicator has fallen below -$300 million. The last time was on January 16, when Bitcoin was still trading above $95,000. The occurrence of two extreme negative readings suggests persistent and planned selling pressure rather than a one-off event.

Further pessimism is fueled by whale activity. CryptoQuant’s whale tracker monitors deposits from over 100 active high-net-worth wallets, detecting large inflows into exchanges. On January 20, whales deposited over $400 million worth of Bitcoin into spot exchanges, following a similar inflow of $500 million on January 15.

Historically, large inflows into spot exchanges often signal impending selling pressure or at least form a liquidity wall that suppresses potential price rebounds. Whales transferring Bitcoin to exchanges usually indicate an intention to sell, as long-term holders tend to store assets in cold wallets. The $400 million single-day inflow shows major holders lack confidence in the market’s outlook and are cashing out at current prices.

Additionally, the past two days’ spot Bitcoin ETF outflows further confirm negative market sentiment. According to SoSo Value data, these 12 funds experienced nearly $900 million in outflows over two trading days, intensifying the current downward trend. ETF outflows imply institutional investors are also retreating, which weighs heavily on retail confidence.

48-Hour Market Crash Key Data

Liquidation Scale: Over $1.5 billion long positions forcibly closed

Spot Selling: Net trading volume -$319 million, indicating aggressive sell pressure

Whale Outflows: Deposited $400 million worth of Bitcoin into exchanges

ETF Outflows: Nearly $900 million in institutional funds over two days

Japanese Bond Crisis Sparks Global Liquidity Shortage

Beyond internal crypto market mechanisms, the complex and worsening macroeconomic environment is exerting severe downward pressure. Market headlines have been dominated by a phenomenon analysts call “Japan,” originating from the Japanese bond market, which has triggered instability in global risk assets.

Presto Research believes the true epicenter of current market stress is Tokyo, not the US. The firm states that chaos in Japanese government bonds (JGBs) has spilled over into broader international markets, sparking “sell US” trades. In this environment, correlations have become aligned, causing stocks, US Treasuries, the dollar, and Bitcoin to decline simultaneously as liquidity drains from the system.

The catalyst for this market volatility was the unexpectedly weak auction of 20-year Japanese government bonds. On Tuesday, the bid-to-cover ratio (a key demand indicator) fell to 3.19 from previous levels of 4.1, indicating waning demand amid already heightened concerns about Japan’s fiscal health.

Kobeissi’s letter further provides context on this capital flight, noting that Japanese insurers sold $5.2 billion of 10-year or longer-term bonds in December. This was the largest monthly sale since data collection began in 2004 and marked the fifth consecutive month of net sales. As Japanese institutions (historically among the world’s largest debt holders) retreat into domestic safe markets, global liquidity tightens, making risk assets like Bitcoin more vulnerable.

Meanwhile, trade policy frictions add another layer of uncertainty. Matrixport points out a decisive shift in Bitcoin options market sentiment, with demand for “put options” (downside protection) surpassing that for “call options.” The firm attributes this defensive stance to President Trump’s renewed threats to impose 10%–25% tariffs on European goods, prompting institutional hedging against macroeconomic volatility.

$90,000 Critical Level Determines Market Direction

(Source: CryptoQuant)

Despite generally bearish sentiment, not all signs indicate a prolonged bear market. Glassnode’s weekly analysis describes the current situation as “slowing momentum,” meaning the overheated market is cooling, but statistically it remains “above neutral.” However, technical realities on the charts remain unstable.

CryptoQuant analyst Axel Adler Jr. considers the $89,800 to $90,000 zone a critical support line for bulls. This range is significant because it represents the “cost basis” (average purchase price) of the most recent buyers, especially short-term holders who entered the market within the past day to a month.

Adler warns that if prices continue to break below this zone, these positions will suffer losses simultaneously. When short-term speculators are underwater with unrealized losses, they become highly sensitive to further declines, increasing panic selling risks and potentially accelerating the downtrend. Even if Bitcoin manages a rebound, upward movement faces resistance. The cost basis for holders with 1–3 months is approximately $92,500.

Furthermore, the aggregate realized price for all short-term holders is $99,300, effectively forming a formidable ceiling that must be surpassed to restore bullish confidence. Currently, Bitcoin remains in a delicate balance. It is affected by massive liquidations on one side and adverse macro conditions on the other, with the $90,000 level serving as a boundary for consolidation and deep retracement.