Bitcoin Hits $90K as Broad Crypto Selloff Deepens

Economic strength and a challenging bond market are raising doubts about any interest rate cuts this year, creating turbulence for the crypto market.

While U.S. stock markets were closed on Thursday in tribute to former President Jimmy Carter, cryptocurrency markets remained active and took the brunt of the uncertainty ahead of Friday’s crucial December employment report.

By late afternoon, bitcoin (BTC) had dipped to around $91,000, a 3% decline over the past 24 hours, marking a return to levels not seen since early December. The broader CoinDesk 20 Index mirrored the downturn, with solana (SOL) and chainlink (LINK) notably struggling, both falling by double digits.

The selloff in crypto follows a strong rally in Q4 of 2024, fueled by optimism following Donald Trump’s election and the expectation of a favorable regulatory environment. A key factor supporting the crypto boom was the Federal Reserve’s decision to lower interest rates by 100 basis points since September. However, recent economic reports showing persistent inflation have raised concerns, causing long-term bond yields to surge by more than 100 basis points since the Fed began easing.

Today’s crypto losses align with the release of the December jobs data on Friday. If the report shows further economic strength, it could diminish the likelihood of rate cuts in 2025, and may even lead to speculations about future rate hikes.

So, what’s next for bitcoin?

“BTC, ETH, and SOL are testing the lows from December 5, and investors are starting to acknowledge that these levels may not hold,” said trader Eugene Ng Ah Sio in an X post. “This often triggers panic among market participants.”

Ng Ah Sio pointed out that the next significant support for bitcoin lies around the $85,000 level if the $90,000 level fails to maintain support.

Venture capitalist Joe McCann suggested that if bitcoin cannot hold above $90,000, it could drop to around $75,000.

In a separate post, trader Skew suggested the latest price drop could be tied to additional bitcoin sales tied to the Silk Road case. Looking at Binance’s order book data, Skew noted that buy orders appear to outweigh the selling pressure, as bid liquidity remains robust.

“What’s interesting is the lack of volatility here, likely due to the relatively small size of the sell flow, along with strong bid liquidity supporting the price,” Skew commented. “This suggests the situation isn’t as bad as it may appear.”