Bitcoin (BTC) struggles to hold $89,040 support, increasing the risk of dropping to $85,000 or lower.

Uncertainty over U.S. Bitcoin reserve plans fuels investor skepticism and market sell-off. Bitcoin ETFs see $134.3 million outflows, led by BlackRock

Bitcoin price has taken a sharp hit, dropping 4% in the past 24 hours to leave investors worried. The global crypto market also saw a huge loss of nearly $99 billion in just 24 hours, reducing the total market cap to $2.89 trillion.

While the crypto market has been known for its volatile swings, this sudden decrease in market value is significant. As of the last update, Bitcoin is trading at $88,000, still holding a 10.06% gain for the week.

Key Reasons For Recent Market Drop

One major reason for Bitcoin’s decline is the uncertainty surrounding the U.S. government’s plans for Bitcoin. President Trump’s announcement of a U.S. Strategic Bitcoin Reserve initially surged the cryptocurrency to $92,000.

However, the market quickly turned bearish as the executive order did not specify how the government would acquire more Bitcoin. This skepticism has led to a sell-off in the market.

Experts like Peter Schiff believe that the lack of clear accumulation plans could hurt Bitcoin’s long-term growth. As the market eagerly awaits details on the U.S. government’s involvement in Bitcoin, any disappointment could have a significant impact on the cryptocurrency’s price movements.

Another reason for Bitcoin’s drop is the significant outflow from Bitcoin spot ETFs. According to Farside data, Bitcoin spot ETFs recorded a massive outflow of $134.3 million.

This came right after a day of positive inflows, where Bitcoin ETFs saw $22.1 million entering the market. Leading the outflows was BlackRock’s iShares Bitcoin Trust (IBIT), which saw a $50.6 million outflow.

This was followed by Grayscale Bitcoin Trust (GBTC) with $34.5 million and Franklin Templeton’s fund with $18 million in outflows. No other major ETF recorded a net inflow, indicating strong selling pressure from institutional investors.

Furthermore, there were liquidations in the crypto market, with traders losing a total of $531 million in the last 24 hours. A majority of these liquidations affected long traders, who faced losses of $398.3 million.

On the other hand, short traders suffered losses of $133 million. These liquidations affected 152,576 traders, and the largest single liquidation occurred on Bitfinex’s BTC/USDT pair, amounting to $15.40 million.

As long positions get wiped out, the selling pressure increases, pushing Bitcoin’s price even lower. Lastly, bitcoin technical analysis suggests that BTC is struggling to hold its key support level.

If it fails to reclaim the $89,041 support, further declines toward $85,000 or even $82,761 could be possible. However, if Bitcoin manages to flip the $90,800 resistance into support, it could attempt a recovery toward $93,625.