Bitcoin Tumbles Below $91K as Leveraged Firms Fuel $1B in Liquidations

Bitcoin has suffered a sharp decline, erasing $1 trillion in market value as it sank below $91,000. The drop has pushed the price below the 2025 realized cost of $103,227, leaving the average buyer in 2025 with a 13% loss according to analysis. The recent correction mirrors the April 2025 drawdown in percentage terms but is shorter in duration.

The selloff has intensified over the past month, with Bitcoin dropping 30% from its October all-time high and 17% in November, marking one of the worst months for the cryptocurrency in over three years. The market is currently experiencing heightened volatility, with over $1 billion in liquidations reported in a single day, signaling a fragile trading environment.

Bitcoin's price movement has been exacerbated by structural challenges, including the hidden pressure from overleveraged digital asset treasury companies. These firms, which raised over $42.7 billion in 2025 to buy and hold Bitcoin and other cryptocurrencies, are now facing forced selling due to declining asset values and debt covenants according to analysis.

How Markets Reacted

Bitcoin's drop below key psychological levels such as $94,000 and $95,000 has accelerated the sell-off, triggering stop-loss orders and further downward pressure. The decline has also led to a broader selloff in the crypto market, with altcoins following Bitcoin's lead amid reduced liquidity and correlated trading behavior.

What Analysts Are Watching

Analysts are closely monitoring several key levels as potential turning points for Bitcoin. The $90,000 level is now a critical support zone, and a sustained break below it could test lower support levels around $88,000 and $85,000. Market makers have also reduced their presence in the Bitcoin order book, with Bitcoin's depth at the 1% price band dropping significantly since October. This reduced liquidity has made the market more susceptible to sharp price movements, particularly when forced selling occurs.

On the institutional side, the growing leverage in the crypto market has also raised concerns. Galaxy's report highlights that crypto leverage hit record highs in Q3 2025, with more than $86.3 billion in industry debt outstanding, including $12 billion tied to digital asset treasury strategies.

Risks to the Outlook

The market is facing multiple headwinds, including macroeconomic uncertainty and regulatory developments. The U.S. government's recent shutdown caused a data blackout, leaving the Federal Reserve "flying blind at a critical period," which has led to a sharp decline in expectations for rate cuts. Bitcoin's correlation with the U.S. dollar and tech stocks has also intensified during the sell-off, undermining its role as a digital gold hedge.

The forced selling dynamics are also compounding the risk. As Digital Asset Treasury Companies face debt restructuring and declining net asset values, they are under pressure to sell assets to stabilize their balance sheets. This creates a self-reinforcing cycle where falling prices lead to more selling, which further depresses prices according to analysis.

What This Means for Investors

For investors, the current environment requires a disciplined approach. Dollar-cost averaging is often recommended to mitigate the risks of timing the market, especially during periods of high volatility. Long-term investors may view the current price level as an opportunity, but they should also be prepared for further corrections before a sustainable recovery is likely.

Retail traders are also playing a role in the sell-off, with many following historical patterns and exiting positions in anticipation of a deeper downturn. This behavior removes a key source of buying pressure, making it harder for the market to stabilize.

While the near-term outlook remains uncertain, the long-term fundamentals for Bitcoin are still intact. Institutional adoption continues to grow, and technological advancements in the Bitcoin ecosystem are progressing steadily. For now, however, the path to recovery will likely depend on whether forced selling subsides and new demand sources emerge, such as renewed ETF inflows or macroeconomic shifts that restore confidence.