Bitcoin The rapid drop to $84,000 during Thursday morning hours in the US was accompanied by equally rapid declines in stocks and precious metals.
But while stocks, gold and silver have rebounded from their worst levels, cryptocurrencies remain near their session lows, with BTC, ether XRP and sunny all were down between 5% and 7% in the last 24 hours.
“Everything from weak earnings results to concerns around Iran and the government shutdown are driving widespread sell-offs,” said Joshua Lim, co-global head of markets at prime brokerage FalconX. “It is causing further easing in the positions of consensus hedge funds and commodity trading advisors in metals and stocks.”
“And cryptocurrencies are also affected by the general sentiment of risk aversion,” he added.
Thursday’s selloff sparked more than $650 million in liquidations of bullish leveraged positions betting on higher prices across crypto assets, according to data from CoinGlass, the second most violent wave of the past month.
Funding Rates Suggest Bottom Forming
Perpetual swap funding rates, a key indicator of market froth, have now turned bearish on major tokens including ETH, SOL, and XRP. In perpetual futures contracts, which have expiration dates, funding rates are periodic payments exchanged between traders based on the difference between the perpetual contract price and the spot price.
When funding turns negative, it means that short sellers (those betting on lower prices) are paying long positions (those betting on a bounce) to maintain their positions, indicating that most traders are leaning bearish.
Historically, persistent negative funding rates have often preceded short-term lows, as overcrowded short positions become vulnerable to sudden price changes.
Some key levels
US spot bitcoin ETF buyers have an aggregate cost basis near $84,099, just below the current price of $84,400. Meanwhile, the actual average market price, a long-term fair value derived from the investment limit divided by active supply, sits just above $80,000. That $80,000 is approaching the November 2025 low, making it a key structural support zone and a potential mean reversion point.
However, a sustained break below $80,000 would likely open the door to a retest of April 2025 levels, when bitcoin briefly fell to around $76,000 amid the sell-off sparked by President Donald Trump’s tariff campaign.
How bad is it and what could change things?
January isn’t over yet, but bitcoin is on track to post its fourth consecutive monthly loss, very notable given that BTC didn’t go down for four consecutive months, even amid its 80% drop during crypto winter 2022. You’d have to go back to 2019 to find a streak of four consecutive downward monthly candles for bitcoin.
“The stock market has been primarily focused on AI infrastructure trading, supported by deregulation and tax benefits coming into effect this year,” said Mark Connors, chief investment officer at Risk Dimensions. “This has eclipsed BTC, that and the standard gold-lead BTC pattern we saw in 2020. I think BTC won’t take its next leg higher until we get a ‘print’ from the US.”
