Bitcoin Plunges Below $85,000: The $600M Liquidation Is Just the Tip of the Iceberg
Bitcoin's sudden drop below $85,000 triggered a massive $600 million liquidation event—but the real story is the macro-economic monster lurking beneath the surface.
The Liquidation Frenzy: A Distraction?
Markets fixated on the immediate bloodbath. Leveraged positions vaporized as the price sliced through key support levels. Yet focusing solely on the liquidation figure is like watching the ambulance and missing the ten-car pileup further down the highway.
The Real Catalyst: A Macro Tectonic Shift
The scarier driver isn't on the crypto charts. It's in the bond markets, central bank balance sheets, and a global liquidity drain that's starting to bite. Traditional finance is undergoing a silent seizure, and digital assets are feeling the contagion first—a classic case of the canary in the coal mine, if the canary was a trillion-dollar asset class.
Why This Isn't Just a 'Crypto Winter'
This pullback connects to forces far larger than typical crypto volatility. It's about the cost of capital recalibrating across all risk assets. When the tide of cheap money goes out, it turns out even the shiniest, decentralized boats can get beached.
So, while traders count their losses in millions, the smart money is watching the macroeconomic dashboard flash red. The $600 million headline is dramatic, but it's merely the first symptom of a much broader financial fever. After all, on Wall Street, they never let a good crisis go to waste—they just repackage it and sell it to you as a hedging strategy.
Macro headwinds compound selloff
Bitcoin drifted lower throughout December on weaker risk appetite stemming from the Federal Reserve's Dec. 10 meeting, where the central bank cut rates but signaled only limited easing in 2025.
Bitcoin's weakness is tied to a “sell-the-news” reaction, with traders de-risking after the Fed maintained a hawkish forward outlook.
Tech and AI stocks declined on disappointing earnings, cooling the high-beta trade that lifted crypto alongside speculative equities.
Spot bitcoin ETF flows also moderated last week, amounting to $286.6 million in net inflows. Despite maintaining consecutive weekly net inflows, capital flows are not keeping pace with the consistent demand that supported the price through much of 2025.
The selloff extended across major altcoins. Ethereum traded at $2,921.81, down 4.6% in 24 hours. Solana fell 3.3% to $125.05, XRP dropped 4.9% to $1.8822, BNB declined 3.5% to $846.29, Cardano shed 4% to $0.3807, and Dogecoin fell 4.6% to $0.1278.
When Bitcoin broke below $90,000, Leveraged positions built during the prior rally became vulnerable.
Long positions got stopped out in waves as the price moved through support levels, with each round of forced selling triggering additional liquidations. Thin liquidity during Asian trading hours amplified the move.
The next hours will be key to determining whether Bitcoin can reverse the leverage-driven crash.
