After a 7% plunge: Is Bitcoin's $90,000 "stress test" shaking the foundation of the bull market?

As panic becomes the norm and support turns into resistance, we are witnessing an extreme stress test of the underlying logic of the crypto market.
In late January 2026, Bitcoin hovered around $93,041, dropping $2,232.8 within 24 hours, a 2.34% decline. Ethereum fell to $3,208.85, a single-day plunge of 3.47%. The DeFi leader UNI was even more brutal, priced at $4.995, down 6.28% intraday, breaking below the market average cost line.

This is not an isolated event. Trump’s announcement of tariffs on eight European countries acted like a stone thrown into a calm lake, triggering a chain reaction across global risk asset markets. The total market cap of cryptocurrencies evaporated $100 billion within 24 hours, and the Fear & Greed Index quickly dropped to the "Fear" zone at 43.

I. The triple pressures behind the data
1. First pressure: The direct impact of macro black swan events
• Trump’s tariff threats essentially represent a sharp surge in geopolitical risk premiums. Historical experience shows that when geopolitical uncertainty rises, funds rapidly withdraw from high-risk assets (stocks, cryptocurrencies) and shift to traditional safe havens (gold, government bonds). Gold prices soared to a record high on Monday, contrasting sharply with the plunge in cryptocurrencies.
• This is not a fundamental problem with cryptocurrencies, macro analyst James Carter pointed out, “This is a typical risk-averse sentiment-driven asset rotation. When panic hits, all risk assets are indiscriminately sold off, whether it’s tech stocks or Bitcoin.”
2. Second pressure: Vulnerability shift in options market structure
• More concerning is the change in internal market structure. On-chain data shows that the options Gamma support in the $88,000 to $92,000 range has significantly weakened. Simply put, previously, market makers needed to hedge risks through inverse operations in this range, objectively suppressing volatility and forming a “soft support.”
• Now, support in this zone has nearly halved, and above $92,000, there is a Gamma risk exposure of up to $1.4 billion. This means that once prices break below key support, volatility will sharply increase, and the decline could become more fluid and intense.
• “The options market has shifted from a ‘volatility suppressor’ to a ‘volatility amplifier,’” said Li Minghao, an options analyst at Deribit. “The current market structure is like removing the buffer cushion from the staircase, any misstep could lead to a faster fall.”
3. Third pressure: The domino effect of leverage
• CoinGlass data shows that in the past 24 hours, crypto longs have been liquidated for a total of $790 million. One large holder, after losing $4.21 million in a liquidation, reopened a long ETH position worth $11.18 million with 25x leverage.
• This extreme behavior reveals the essence of the current market: in a high-leverage environment, any directional volatility is magnified. One adjustment triggers a chain of liquidations, which in turn exacerbates price swings, creating a vicious cycle.

II. Key positions: Current state of two major assets
1. Bitcoin: Dancing on the $90,000 cliff
• The weekly chart reveals Bitcoin’s real situation: at $93,041, it is at a critical crossroads. The $90,000-$92,000 zone is the strongest support band, with a large amount of chips accumulated here.
• If this support is effectively broken, Bitcoin could quickly fall to find a new equilibrium. Technical analyst Wang Tao pointed out, “According to the ‘gap fill’ theory, the next strong support area is around $72,000-$74,000.”
• But it’s worth noting that Bitcoin’s Average True Range (ATR) is as high as $8,137.4, meaning that under current volatility, Bitcoin’s normal weekly fluctuation range exceeds $8,000. Investors must be fully aware of this volatility.
2. Ethereum: The ultimate test of institutional cost zone
• ETH’s price has fallen to $3,208.85, testing the lower boundary of the repeatedly emphasized “institutional cost consensus zone.” This zone ($3,000-$3,200) is where institutions like 7 Siblings and Bitmine have been continuously accumulating ETH over the past months.
• Ethereum is undergoing a faith test. Pantera Capital partner Paul Veradker said, “If this level is effectively broken, it will trigger a broader sentiment collapse, but if it holds, this is a golden pit.”

III. Perspective from experience: Is this a replay of 2018 or a repeat of March 2020?
Comparing to similar moments in history, we can identify two references:
Reference 1: November-December 2018
Bitcoin traded around $6,000 for months, considered a “solid bottom,” but ultimately broke down at the end of the year, initiating the final panic decline, bottoming at $3,100. Features: long sideways consolidation followed by a breakdown, market sentiment shifting from hope to despair.
Reference 2: March 2020
The COVID-19 pandemic triggered global market panic, with Bitcoin plunging from $7,900 to $3,800 within 48 hours. Features: black swan event causing indiscriminate selling, but recovery was very fast, returning to previous levels within two months.

The current situation resembles March 2020 more. Trader Mark Dawson analyzed, “A liquidity crisis triggered by external sudden events (then the pandemic, now tariffs). Once the event clarifies or is digested, the market will recover quickly. The fundamental difference from 2018 is that today’s crypto market has ETF institutional funds, a more mature derivatives market, and broader adoption, which all provide stronger bottom support.”

IV. Survival strategies: Finding direction in the eye of the storm
For investors in different situations, strategies should vary:
1. If you are trapped (holding unrealized losses):
Review your cost basis: If you are trapped above key support levels (BTC $90,000, ETH $3,200, UNI $5.0), and your position is not heavy, consider adding at deeper levels (BTC $87,000, ETH $3,000, UNI $4.5) to lower your average cost.
Set mental stop-losses: Ask yourself, “If the price drops another 20%, can I bear it?” If not, consider reducing your position now.
Use time to buy space: If your position is not heavy and you are holding core assets like BTC, ETH, you can choose to “wait it out,” waiting for market sentiment to recover.
2. If you are on the sidelines:
This is the time to execute disciplined trading. It is recommended to adopt a three-layer pyramid layout:
Tried-and-true layer (30% of funds): Place orders at BTC $90,000-$92,000, ETH $3,050-$3,150, UNI $4.5-$4.8 to test support strength.
Core layer (50% of funds): Place orders at BTC $87,000-$89,000, ETH $2,850-$2,950, which are more ideal value zones.
Reserve (20% of funds): Keep cash ready to respond to two possible scenarios: 1) market continues to plunge to extreme levels (BTC $72,000); 2) market reverses strongly, requiring right-side chasing.

Three mistakes to avoid:
One-time bottom fishing: No one can buy at the absolute bottom; staggered entries are the only wise choice.
Using leverage: In a market with ATR over $8,000, any leverage is suicidal.
Emotional trading: Don’t panic sell during sharp declines, nor blindly chase highs during rebounds.

V. Key week: Two data points that will determine short-term fate
In the coming week, two events will dominate market sentiment:
1. US PCE Price Index (January 31)
This is the Fed’s most closely watched inflation indicator. If the data exceeds expectations, it may reinforce the “higher interest rates for longer” expectation, further suppressing risk assets. If the data is moderate, it may ease market anxiety.
2. Bank of Japan policy meeting (January 31)
As the last negative interest rate central bank globally, any policy shift by Japan will influence the global liquidity landscape. Any tightening signals could trigger a new round of risk aversion.

Before the data release, the market is likely to remain volatile. Morgan Stanley analyst Lisa Chen predicted, “Smart money will stay cautious, waiting for uncertainty to clear before making big moves.”

VI. Long-term perspective: Has the bull market’s foundation been shaken?
Looking back at the root causes of this correction: geopolitical risks, options structure changes, leverage liquidations—none are related to Bitcoin halving cycles failing, Ethereum ecosystem collapsing, or DeFi demand disappearing.
The bull market’s foundation remains solid:
• Halving cycles: The fourth halving, less than two years ago, continues to exert supply shocks.
• Institutionalization: ETF holdings by BlackRock, Fidelity remain at all-time highs.
• Technological evolution: Bitcoin Layer 2 solutions, Ethereum’s Cancun upgrade ecosystem, and DeFi cash flow innovations are ongoing.

Markets periodically need such stress tests, as a16z crypto partner Chris Dixon summarized, “Washing out fragile leverage, scaring off hesitant speculators, allowing true builders and long-term holders to acquire cheaper chips. After each deep correction, the market’s foundation becomes healthier.”

When prices repeatedly battle around $90,000, the fear index hovers near 40, and social media is flooded with pessimism—history tells us this is often not the end, but the beginning of a new rally.

The question is not whether the market will recover, but whether your positions are still in the game when it does—sowing in panic, harvesting in euphoria—this is the eternal truth of capital markets.
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Disclaimer: This article consolidates analysis from public market data and historical references, aiming to provide informational insights and does not constitute investment advice. Cryptocurrency markets are highly volatile; all investment decisions should be based on independent research.