Bitcoin briefly dipped to its lowest level since April as investors fled tech and AI-related assets. The growing correlation between Bitcoin, Nasdaq, and risk-off sentiment is shaping the next direction of the market. Here is the full analysis.
The crypto market kicked off the week with a dramatic move as Bitcoin slid to $89,259 on Tuesday (XX/XX), marking its lowest level since April 22. This is the first time in more than six months that Bitcoin has fallen below the psychologically important $90,000 threshold — sparking widespread concern among global investors.
Despite the sharp morning decline, Bitcoin managed to rebound during the afternoon session. According to Coin Metrics, the world’s largest cryptocurrency closed the day up 1.6%, trading around $93,236.
Over the past 12 months, Bitcoin remains up approximately 2%, although its gains have been significantly compressed following weeks of downward pressure since early October.
Importantly, this decline did not occur in isolation. Instead, it mirrors broader shifts happening across the global financial landscape.
Over recent weeks, the U.S. stock market has seen a broad sell-off in technology stocks, particularly those linked to artificial intelligence (AI). The Nasdaq 100, home to tech heavyweights like Nvidia, Microsoft, Meta, and Amazon, has dropped 4.5% this month alone.
This synchronized move between crypto and tech stocks is no coincidence. In recent years, Bitcoin and the tech sector have become increasingly correlated as:
- Major institutional investors often hold both Bitcoin and AI-related stocks.
- When risk-off sentiment hits, they simultaneously unwind positions across both asset classes.
- Bitcoin tends to react faster, acting almost like an early risk sentiment indicator.
In fact, Bitcoin reached an all-time high above $126,000 in early October, but it started to retreat even before tech stocks began their latest correction. This dynamic has led analysts to believe Bitcoin was foreshadowing the shift in investor sentiment.
Mike O’Rourke, Chief Market Strategist at Jones Trading, emphasized that the correlation between Bitcoin’s drop and the tech-stock sell-off “is undeniable.”
He warned:
“It’s alarming to see a $1.8 trillion speculative asset significantly influence a $32 trillion index like the Nasdaq 100. It highlights how sensitive equity markets have become to speculative flows.”
This observation underscores a broader trend:
Bitcoin has increasingly become part of institutional multi-asset portfolios. As a result, significant moves in Bitcoin can create ripple effects across the tech sector, particularly among highly valued companies that are sensitive to shifts in liquidity and investor sentiment.
While the drop below $90,000 may have rattled retail traders, several industry experts argue that the move is consistent with Bitcoin’s long-term cycle behavior.
Willem Schroé, CEO of Bitcoin layer-2 network Botanix Labs, explains:
“Bitcoin dipping below $90,000 doesn’t change the bigger picture. Every cycle has these 20–30% pullbacks to clear leveraged positions. Historically, these periods form the foundation for the next major bull run.”
Looking back at the 2013, 2017, and 2021 cycles, Bitcoin experienced multiple 25–35% corrections after reaching new highs — each time preceding a strong continuation of the bull trend.
The current pullback appears to follow a similar pattern, suggesting this may be more of a “shakeout phase” rather than a structural reversal.
A key driver behind Tuesday’s drop was the mass liquidation of leveraged long positions. Derivatives data shows an abrupt spike in forced liquidations within just a few hours.
Market statistics indicate:
- Hundreds of millions of dollars in long positions were wiped out.
- Nearly 80% of liquidations involved high leverage.
- This rapid unwinding forced Bitcoin to break below the $90,000 support level.
Leverage has always been a double-edged sword in crypto markets:
It fuels rapid rallies — but also triggers extreme downside volatility when momentum shifts.
The broader macro environment is becoming more cautious, with several factors pushing investors into risk-off mode:
- Interest rates remain higher for longer.
- U.S. economic growth projections are slowing.
- AI-related stocks are cooling after months of explosive gains.
- Investors are rotating back into safer assets such as the U.S. dollar and Treasury bonds.
In such an environment, highly volatile assets like Bitcoin are typically the first to face heavy selling pressure.
This explains why Bitcoin’s decline was sharper and faster than that of tech equities.
Analysts currently see two main scenarios for Bitcoin’s next move:
If the $90,000 support zone continues to hold, Bitcoin could:
- Consolidate in the $92,000–$98,000 range
- Attract new institutional inflows
- Retest the $100,000 psychological level in the coming weeks
Many long-term models continue to point toward an extended bull cycle following the latest halving.
If selling pressure intensifies, Bitcoin may revisit deeper support levels near $78,000–$82,000 which served as the accumulation zone earlier this year.
However, most market analysts believe the long-term uptrend remains intact and that recent volatility reflects normal cyclical behavior, not the start of a prolonged downturn.
Bitcoin’s dip below $90,000 is a reminder of the asset’s inherent volatility — but it also highlights its increasingly central role in global financial markets. The simultaneous sell-off in tech stocks, rising risk-off sentiment, and mass liquidation of leveraged positions created the perfect storm for this week’s correction.
Yet, history suggests this type of pullback is not unusual, and often sets the stage for stronger rallies ahead.
As long as Bitcoin maintains its larger bullish structure, the current decline may be viewed less as a warning — and more as a resetting phase for the next leg of the cycle.
Due to risk-off sentiment, a tech stock sell-off, and mass liquidation of leveraged long positions.
Yes. Bitcoin and tech equities have become increasingly correlated because many large investors hold both assets.
No. Historically, 20–30% pullbacks are common during Bitcoin bull cycles.
Yes. If the $90,000 support zone holds, Bitcoin could retest the $100,000 level in the near term.
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