Bitcoin’s $10k slide wipes out January gains as market confidence falters

Bitcoin’s drop to around $87,790 on Tuesday felt different from the usual bouts of volatility. It was not simply about price, but about confidence and how quickly it vanished.

By Wednesday, the Crypto Fear and Greed Index had collapsed to 24, deep in “extreme fear” territory. That shift captured the mood across the market. Optimism that carried bitcoin higher through January has evaporated in a matter of days.

In less than 48 hours, bitcoin gave back all of its gains for the year. From its 2026 high near $98,000, the price slid by roughly 10 per cent. The speed of the move caught many traders wrong-footed and exposed how fragile bullish positioning had become beneath the surface.

The damage was not subtle. More than $1.8 billion worth of positions were liquidated over two days, with an overwhelming majority on the long side. At the same time, the total crypto market lost an estimated $225 billion in capitalisation. This was the sharpest pullback since November. It was fast, disorderly and unforgiving.

Why Bitcoin fell so hard

The initial trigger came from outside crypto. A renewed bout of global risk aversion swept through markets after fresh tariff threats from US President Donald Trump. Investors were already uneasy about inflation, slowing growth and geopolitical tension. This pushed volatility higher across equities and encouraged capital to retreat into safer assets.

Once again, Bitcoin traded like a high-risk asset rather than a hedge. As sentiment turned, crypto prices reacted quickly and decisively.

Pressure also came from Japan. A sell-off in Japanese government bonds pushed yields higher and raised concerns about stability in one of the world’s most important bond markets. While the connection to crypto may seem indirect, the pattern is familiar. When stress appears in large, liquid bond markets, global investors tend to reduce exposure elsewhere. Risk assets suffer first. Bitcoin was no exception.

Market structure did the rest. Leverage remains a defining feature of crypto trading, particularly in derivatives. As prices slipped, margin calls forced automatic selling. That selling pushed prices lower, triggering more liquidations and accelerating the decline. Once traders realised how crowded long positioning had become, confidence faded rapidly. Liquidity thinned. Volatility surged.

Technical signals added to the sense of unease. Bitcoin broke below its 50-day exponential moving average, a level that had supported the January rally. For many traders, that breach matters less for its maths than for its message. It shifts the narrative from a healthy pullback to the risk of a deeper trend change. In risk-off markets, broken support tends to repel buyers rather than attract them.

A clear hit to confidence

The loss of confidence has been immediate. Many retail traders were positioned for further upside and have either been forced out or chosen to reduce exposure. That retreat drains short-term liquidity and makes rebounds harder to sustain.

Institutional players are watching closely. Flows into and out of spot bitcoin ETFs, along with changes in futures open interest and funding rates, will offer early clues about whether confidence is stabilising or continuing to erode.

From here, the outlook is finely balanced. One scenario sees this move as a painful but necessary reset. If macro pressures ease and bond markets calm, bitcoin could find a floor and trade sideways. A period of consolidation would help wash out excess leverage and allow sentiment to recover gradually, without the need for a sharp bounce.

The alternative is less reassuring. If geopolitical tensions persist and stress in global bond markets lingers, risk appetite may remain subdued. In that environment, bitcoin could struggle to reclaim key technical levels. Further downside would not be surprising. Altcoins, with thinner liquidity, would likely bear the brunt of any extended weakness.

There is also a bigger takeaway. Crypto no longer exists in a vacuum. As Bitcoin becomes more embedded in global portfolios, it is increasingly exposed to the same macro forces that drive equities, bonds and currencies.

Bitcoin trades around the clock. Fear does not. When traditional markets wobble, crypto now wobbles with them. As crypto becomes more integrated into global finance, those correlations are likely to strengthen rather than fade.

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