Bitcoin drops below $86,000 again: crisis or opportunity?

Coordinated in Beijing Time on December 18 early morning, Bitcoin’s price once again fell below the psychological level of 86,000 USD amid fluctuations. According to Gate market data, BTC/USDT hit a low of 85,993 USD, with a 24-hour decline of 1.92%.

Market analysis generally believes that this decline is the result of multiple factors, including long-term holders continuously cashing out, weakening market liquidity, and upcoming macroeconomic data releases.

01 Price Dynamics: Bitcoin in Volatile Decline

Bitcoin experienced significant price fluctuations on December 18. Data from Gate shows that in the early morning, BTC briefly dropped below 86,000 USD, currently reporting at 86,993 USD, with a 24-hour decline of 1.92%.

This decline was not a straight downward move. Prices rebounded to 86,159.5 USD in the morning but failed to sustain a breakthrough above the 86,000 USD level, indicating intense market battles around that price point.

Compared to the historic high of over 126,000 USD set in October, Bitcoin’s price has fallen by nearly 30%, entering a correction zone. Currently, prices are oscillating within the 85,000–87,000 USD range, as the market searches for a clear direction.

02 Core Reasons: The Cash-Out Wave of Long-Term Holders

Blockchain data shows that Bitcoin held for several years is flowing back into the market at a rare pace in recent years. Since early 2023, the number of Bitcoins that haven’t moved for at least two years has decreased by about 1.6 million coins, worth approximately 140 billion USD at current prices.

In 2025 alone, nearly 300 billion USD worth of Bitcoin that had been dormant for over a year is re-entering circulation. CryptoQuant, a blockchain analysis firm, pointed out that in the past 30 days, the scale of long-term holder sell-offs reached one of the highest levels in over five years.

Senior analyst Vetle Lunde from K33 stated that unlike previous cycles, this “waking sell-off” benefits from deep liquidity brought by US ETFs and corporate funds, allowing early investors to realize gains within six-figure price ranges.

03 Market Background: Dual Contraction of Liquidity and Participation

Over the past year, the sell-off by long-term holders was absorbed by newly launched Bitcoin ETFs and demand from crypto investment institutions. But recent developments have changed markedly: ETF fund flows have turned net outflows, derivatives trading volume has declined, and retail participation has significantly weakened.

According to data from Coinglass, the open interest of Bitcoin options and perpetual contracts remains well below levels before the October crash. This indicates that many traders are still on the sidelines, while derivatives markets dominate the trading volume in crypto.

Chris Newhouse, research director at DeFi research firm Ergonia, described the current market as undergoing a “slow bleeding” process, characterized by continuous spot selling while buy-side liquidity remains relatively thin.

04 Technical Outlook: Key Support and Potential Rebound

From a technical analysis perspective, the 85,000–86,000 USD zone constitutes the most important short-term support. Gate Research Institute pointed out that if this zone holds effectively, a technical rebound may occur in the short term.

However, if the 85,000 USD support fails, prices could further decline to the 82,000–80,000 USD demand zone. The market is still operating within a clear downtrend channel, with multiple recent rejections near the upper boundary (around 90,000 USD).

Regarding technical indicators, MACD has formed another death cross, with the momentum histogram remaining below zero, indicating that downward pressure has not been fully released. Prices are running along the lower Bollinger Band, with the bands narrowing significantly, suggesting volatility compression.

The table below summarizes key price levels and market structure:

05 Institutional Movements: Capital Flows in Contrarian Positions

Despite overall market pressure, some institutional funds are still deploying contrarian positions. According to Gate weekly report, BitMine has increased its ETH holdings by 102,259 coins, and Strategy has added over 10,000 BTC for two consecutive weeks.

The integration of traditional finance and crypto is accelerating. Securities financing infrastructure giant EquiLend announced a strategic minority investment in regulated crypto financing service provider Digital Prime Technologies.

This partnership aims to connect the approximately 40 trillion USD capital pools in traditional financial markets with tokenized markets via the Tokenet institutional lending network, indicating an accelerating trend of institutional capital opening up to on-chain lending, clearing, and asset-backed trading mechanisms.

06 Future Outlook: Possibility of the Selling Wave Nearing End

Vetle Lunde, senior analyst at K33, believes that the sell-off by long-term holders may be nearing its end. Based on historical on-chain data, he pointed out that about 20% of Bitcoin supply has been reactivated in the past two years, approaching an important threshold.

Looking ahead, the selling pressure from long-term holders seems to be saturating. Lunde predicts that by 2026, early investors’ concentrated sell-offs will significantly weaken.

As Bitcoin further integrates into institutional investment systems, the amount of coins held for over two years may rebound, and the market structure could gradually shift toward net buying dominance. This structural change may lay the foundation for the next bull market.

Future Outlook

After a brief rebound in the early morning, Bitcoin’s price retreated again during the trading session. As of press time, Bitcoin hovers around 86,000 USD, indicating intense market competition at this key level.

Traders are generally watching the upcoming US economic data releases. Data from Glassnode shows that large holders holding between 100 and 1000 Bitcoins increased their holdings by 54,000 BTC over the past seven days.

Their total holdings rose from 3.521 billion to 3.575 billion Bitcoins, reaching the highest cumulative level since 2012. This data hints at underlying support forces within the market structure.