Bitcoin News Today: Bitcoin Slides Below $87K as ETF Outflows and Fear Signal Deepening Downtrend

Bitcoin's price has fallen below $87,000 amid ongoing bearish sentiment and ETF outflows, raising concerns about a potential deeper correction. The broader cryptocurrency market has also weakened, with market capitalization hovering near $2.96 trillion, close to late November lows. On-chain analytics suggest that the recent rebound has lost momentum, hinting at a possible resumption of downward pressure.

Retail traders have turned increasingly bearish, with Santiment reporting heightened mentions of price declines and a Fear & Greed Index reading of 22, indicating extreme fear. This level aligns with past market bottoms where Bitcoin eventually rebounded, suggesting the current pessimism may signal a stabilization phase.

Bitcoin's short-term holders are now in the red, as the price has remained below their average entry level of $104,000 for over a month. Long-term holders have also been reducing their holdings, with over 500,000 BTC sold since July. This trend reinforces the bearish tone in the market.

Why the Standoff Happened

Multiple factors have contributed to the deepening bearish sentiment. ETF flows have turned negative, with spot Bitcoin ETFs recording $338.81 million in outflows over the past week. This marks the largest weekly outflow since mid-November and signals waning institutional interest. At the same time, major players like Fidelity and BlackRock have seen continued withdrawals, with BlackRock's ETHA ETF alone losing $221 million.

The market has also been affected by broader macroeconomic uncertainty. The Federal Reserve's December rate cut, while offering some short-term relief, came with a hawkish tone that dampened expectations for future easing. Futures markets now price in a 73% chance of unchanged rates at the January meeting and a 47.6% chance at March.

How Markets Reacted

Altcoins have not been spared from the selloff. Ethereum remains below $3,000 and the 50-day EMA, while XRP has dipped below $1.90 despite continued ETF inflows. The altcoin market's total trading volume has fallen by 15% over the past week, reflecting reduced investor confidence.

Institutional interest in XRP, however, remains steady, with ETFs continuing to add to their holdings. XRP ETFs added $8.5 million on Tuesday alone, bringing the total inflow since their launch to $1.01 billion. This divergence between Bitcoin and XRP highlights the uneven performance across the crypto market.

Meanwhile, stablecoin usage is on the rise, with Galaxy Digital predicting that stablecoins could surpass the ACH system in transaction volume by 2026. The firm attributes this to regulatory clarity and growing adoption, with dollar-pegged stablecoins like SoFiUSD and Western Union's US Dollar Payment Token expanding the landscape.

What Analysts Are Watching

Bitcoin's next key support level is around $80,600, a level it previously tested in November. On-chain indicators such as the Relative Strength Index (RSI) and MACD suggest that Bitcoin is still under pressure, with a sell signal expected if the MACD line crosses below the signal line. Traders are also monitoring whether institutional buyers will step in to stabilize the price.

The Fear & Greed Index, currently at 22, has historically preceded market rebounds, with Bitcoin recovering over 20% after similar levels in past cycles. However, this signal is not a guarantee, and analysts caution that macroeconomic conditions will remain a key driver of the market.

Fidelity's Jurien Timmer, a longtime Bitcoin bull, has turned bearish, warning that 2026 could be a "year off" for Bitcoin as the market enters a post-halving bear phase. He cites historical patterns and the timing of Bitcoin's October peak near $125,000 as signs that a long winter is ahead. Timmer also contrasts Bitcoin's performance with gold, which has held much of its gains during the recent correction.

Risks to the Outlook

The risk of further downside remains high, with analysts like CryptoQuant projecting a potential decline to $70,000 and as low as $56,000 in a prolonged bear scenario. This projection is based on a sharp slowdown in demand growth and the fact that U.S. spot Bitcoin ETFs have turned into net sellers in Q4 2025.

Another risk is the structural weakness in the crypto market, particularly among retail investors. Santiment data shows that retail traders are continuing to expect lower prices, with mentions of "lower" and "below" outpacing bullish signals. This sentiment could prolong the bearish phase if it translates into sustained selling pressure.

On the other hand, there are signs of stabilization, particularly in stablecoin and institutional ETF activity. If the Fear & Greed Index continues to hit extreme levels while price action slows, this could indicate emotional exhaustion among retail traders and a potential relief rally. On-chain metrics suggest that large holders have been accumulating during these fear-driven periods.

What This Means for Investors

Investors are advised to remain cautious and monitor key on-chain metrics for signals of stabilization. For now, the market is navigating a period of uncertainty, with Bitcoin and the broader market under pressure. Positioning for a potential rebound may require patience and a focus on macroeconomic trends, particularly in U.S. inflation and Fed policy.

For long-term holders, the current environment offers opportunities to accumulate at lower prices, especially if institutional players continue to step in. However, short-term traders should be mindful of the risks, including potential ETF outflows and broader market corrections.

The coming months will be critical in determining whether the market can stabilize or if the bearish phase will deepen. With the Fear & Greed Index at its lowest levels since November's capitulation, the next move could be a turning point for Bitcoin and the crypto market as a whole.