Bitcoin (BTC) traded at $86,134.03 on Tuesday, pushing investor sentiment to its lowest point in months as the market grappled with $200 million in liquidations and conflicting narratives regarding the source of the selling pressure.
The Crypto Fear & Greed Index dropped to 11 (“Extreme Fear”), down from 16 yesterday, marking the deepest pessimism since the current correction began. The selloff has been compounded by unverified reports ranging from regulatory enforcement in China to aggressive liquidation by major institutional players.
Conflicting Narratives on Sell Pressure
Market participants are currently debating two primary catalysts for the sudden downturn.
First, trader and analyst @NoLimitGains attributed the drop to a “supply shock” originating in China. The analyst claimed that renewed regulatory tightening in Xinjiang forced approximately 400,000 mining units offline in December, causing an 8% dip in network hashrate and forcing miners to sell BTC to cover relocation costs.
Second, on-chain commentator DeFiWimar alleged that the volatility stems from concentrated selling by major exchanges and market makers rather than miners. In a post on X, DeFiWimar cited specific outflow figures, claiming Wintermute, Coinbase, BitMEX, Binance, Bitwise, and Bitfinex collectively “dumped” nearly 40,000 BTC.
“This is not retail. This is pure market control,” DeFiWimar wrote, listing Wintermute (9,315 BTC) and Coinbase (8,375 BTC) as the largest sellers.
Bitcoin Analyst Views: $180,000 Still in Play?
Despite the bearish sentiment and price action, Fundstrat Global Advisors Managing Partner Tom Lee reaffirmed a bullish outlook. Lee stated Tuesday that he remains optimistic Bitcoin can double to $180,000 before the end of January.
Lee further noted that if Bitcoin breaks the $125,000 mark, the traditional “four-year cycle,” a pattern heavily relied upon by technical analysts to predict market tops, would be effectively broken, signaling a shift in the asset’s long-term market structure.
Bitcoin remains approximately 31% below its October all-time high of $126,210. As of 1:56 a.m. ET on Tuesday, the cryptocurrency was trading at $85,983.10, down 4% over the past 24 hours, according to the latest CoinMarketCap data. The continued slide has wiped out recent gains and pushed total market liquidations past $200 million in the last day alone.
Chain Street’s Take
Fear & Greed at 11 isn’t the end but it’s often the bottom. When everyone’s this scared at $86K (levels that were pipe dreams two years ago), the selling feels more like leverage flushing than fundamental collapse. Watch $125K: break it and the old cycle theories shatter. For now, this looks like weak hands handing bags to stronger ones.
