The price of Bitcoin tumbled below the psychologically significant $80,000 threshold on Monday, hitting a low of $74,541 at one point—its weakest level since April 2025. This sharp decline triggered the forced liquidation of leveraged positions exceeding $500 million in value within a single 24-hour period, raising questions about the catalysts behind the sell-off.
Macroeconomic Headwinds Build
Beyond technical market factors, a shift in fundamental outlook is applying pressure. Investor sentiment has been unsettled by the nomination of former Federal Reserve Governor Kevin Warsh as the designated next Fed Chair. Warsh has a public record of advocating for a reduction in the Fed’s balance sheet, a move that would effectively drain liquidity from financial markets. Historically, Bitcoin has thrived in environments of abundant liquidity.
Brian Jacobsen, Chief Economist at Annex Wealth Management, highlighted this dynamic, noting that an expanded Fed balance sheet has historically supported liquidity on Wall Street and fueled speculative activity, including in crypto assets. A turn toward tighter monetary policy could remove this crucial tailwind.
Leverage and Thin Liquidity Fuel Volatility
The selling pressure intensified over the weekend, when typically thin market liquidity amplified moderate selling waves into dramatic price swings. Traders holding leveraged long positions were particularly impacted, with over $500 million in positions forcibly closed on perpetual futures platforms. Shallow order book depth caused key support levels to crumble rapidly, allowing Bitcoin to briefly test the $74,000 mark before a partial recovery above $76,000.
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This lack of robust liquidity is a double-edged sword: prices can rebound as quickly as they fall. The current high volatility underscores that without deeper market participation—often absent during weekends when institutional desks are less active—Bitcoin remains vulnerable to extreme, leverage-driven movements.
Options Sentiment Turns Defensive
A clear shift in market sentiment is visible in the derivatives space. On Deribit, the world’s largest crypto options exchange, open interest in put options with a $75,000 strike price has surged to $1.159 billion. This figure now nearly matches the $1.168 billion in open interest for call options at the $100,000 strike.
This rebalancing marks a departure from the pattern established after the 2024 U.S. election, when traders systematically positioned for higher prices. The substantial rise in put buying indicates that market participants are now actively hedging against the potential for further downside.
Technical Outlook and Key Levels
Since reaching record highs above $120,000 in early October 2025, Bitcoin has shed approximately one-third of its value. Analysts are now watching a support zone between $75,500 and $76,000. On the upside, a resistance band has formed between $84,000 and $86,000. As long as market liquidity remains thin and macroeconomic uncertainties persist, elevated volatility is likely to continue.
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