The cryptocurrency market continues its downward trajectory, with Bitcoin falling below the $87,000 threshold for the first time since April as the digital asset sector experiences a prolonged correction now stretching beyond one month.
Market Bellwether Struggles Amid Widespread Selling
Bitcoin dropped more than four percent during Thursday's trading session, slipping below the psychological $87,000 level that market watchers had been monitoring closely. The decline represents the latest chapter in a sustained retreat that has seen the cryptocurrency struggle to maintain the momentum that propelled prices higher earlier this year.
The current pullback follows weeks of position unwinding among fast-moving traders and reflects lingering effects from October's record run-up. These factors have collectively left the market more vulnerable to selling pressure and sharp price swings, creating challenging conditions for both institutional and retail participants.
Leverage Purge and Whale Activity Drive Decline
According to James Butterfill, head of research at CoinShares, large cryptocurrency holders have sold more than $20 billion since September, contributing significantly to the current market pressure. "Crypto is suffering from heavy selling by whales who follow the four-year cycle narrative, and this is typically the point in that cycle where prices fall," Butterfill explained.
While Butterfill noted that his firm doesn't necessarily subscribe to this view from a fundamentals perspective, he acknowledged that the behavior has become somewhat self-fulfilling as major investors continue to reduce their positions.
The current market conditions cannot be separated from October's violent liquidation cascade, when more than $19 billion in leveraged positions were forced out in a single session. That dramatic event broke market momentum and hollowed out liquidity across major trading venues, with order books never fully recovering their previous depth.
Cross-Asset Divergence and Market Fragility
Meanwhile, traditional stock markets experienced their own volatility, initially surging on a fresh wave of AI exuberance following positive results from Nvidia, only to see those gains evaporate later in the trading day. Concerns about lofty artificial-intelligence valuations and doubts over the Federal Reserve's ability to cut rates in December contributed to the uncertainty on Wall Street.
The cryptocurrency market remains trapped in what analysts describe as a self-contained purge of leverage and fading retail demand - a cross-asset split that has deepened since early October. This divergence from traditional markets highlights the unique challenges facing digital assets independent of broader financial trends.
The fragility created by October's liquidation event continues to define every downdraft, with prices remaining hypersensitive to modest flows due to the incomplete rebuilding of market liquidity. This structural vulnerability means that even relatively small selling pressure can trigger disproportionate price movements in the current environment.
