Bitcoin dips below $90,000, marking 'significant' psychological break: analysts

Bitcoin dropped below a new local low of $90,000 on Monday night, falling to a seven-month low.

According to The Block's crypto price page , bitcoin slid to a low of around $89,650 on Monday night, continuing its steep decline from late October. It has partially recovered to trade at $89,990 as of 11:43 p.m. on Monday, down 5.55% in the past 24 hours.

"Bitcoin has fallen below the $90,000 mark in today's session, a significant psychological break that underscores the market’s current fragility," said Rachael Lucas, crypto analyst at BTC Markets. "Institutional investors are leading the charge, with ETF outflows signaling profit-taking and risk-off positioning ahead of year-end."

Spot bitcoin ETFs in the U.S. have posted over $3 billion worth of net outflows in the past three weeks, SoSoValue data shows.

Another analyst said the short-term traders are adding pressure to prices, even though long-term holders remain confident in bitcoin.

"BTC's long-term value as digital gold remains intact, but short-term selling from traders, leveraged players, and funds adjusting exposure is weighing on prices," said Vincent Liu, CIO at Kronos Research.

Liu added that macroeconomic factors and asset rotation continue to drain liquidity from the market, putting further pressure on prices. 

Market experts have previously pointed out that liquidity has been tight recently due to the U.S. government shutdown, which kept the Treasury General Account (TGA) elevated by limiting the government's ability to spend on non-essential operations.

Moreover, the uncertainty surrounding the Federal Reserve's interest rate decision in December also weighs on investor sentiment. While traders were hopeful for another rate cut next month, recent reports suggested that the move is being debated within the central bank. The CME Group's FedWatch Tool currently gives a 57.1% chance that the Fed will not make another cut in December.

However, analysts did note that the U.S. government reopening may ease the liquidity issues in the near term, potentially leading a reversal in the crypto market.

Key levels to watch

"BTC slipping below $90K marks a short-term retracement, with $85K–$87K as the immediate support zone," Liu said. "Regaining $90K is crucial for buyers to restore confidence, especially with sentiment still muted at 11 on the Fear Greed Index."

BTC Markets' Lucas said the next key levels to watch are $85,000 as short-term support and $80,000 as a critical threshold, where a break below could lead to a low of around $74,000 last seen in February.

The Fed decision for December remains the key event for traders to watch, while the U.S. unemployment data release on Thursday will indicate the current health and trajectory of the labor market, directly influencing the probability of the Federal Reserve raising or cutting interest rates next month.

"Year-end tax harvesting could add selling pressure as investors lock in gains or losses, while macro headlines around trade policy or geopolitical shocks could amplify volatility," Lucas added. "On the positive side, any major ETF announcements or network upgrades could stabilize sentiment."