After a 7% plunge: Bitcoin faces a "stress test" at $90,000. Has the foundation of the bull market been shaken?

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 in 24 hours, a 2.34% decline. Ethereum fell to $3,208.85, a sharp 3.47% drop in a single day. The DeFi leader UNI was even more brutal, 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, like a stone thrown into a calm lake, triggered a chain reaction in global risk asset markets. The total market cap of crypto evaporated $100 billion within 24 hours, and the Fear & Greed Index quickly dropped to 43, entering the "fear" zone.
I. The threefold pressure behind the data
1. First pressure: The direct impact of macro black swan events
• Trump’s tariff threats essentially represent a 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 crypto plunge.
• 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 Bitcoin’s 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.”
• But 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 the price breaks 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 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 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 amplified exponentially. 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 our repeatedly emphasized “institutional cost consensus zone.” This area ($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 rapid, returning to previous levels within two months.
The current situation resembles March 2020 more. Trader Mark Dawson analyzed, “A liquidity crisis triggered by external shocks (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 foundations, which will 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 invested in 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 follow disciplined execution. 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 on hand to respond to two possibilities: 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 lowest point; staggered entries are the wisest choice.
Using leverage: In a market with ATR exceeding $8,000, any leverage is suicidal.
Emotional trading: Don’t panic sell during sharp declines, and don’t blindly chase highs during rebounds.
V. Key week: Two data points that 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, Japan’s policy shift 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?
Reviewing the fundamental reasons for this correction: geopolitical risks, options structure changes, leverage liquidations—none of these relate to Bitcoin halving cycle failure, Ethereum ecosystem collapse, or DeFi demand disappearance.
The bull market’s foundation remains solid:
• Halving cycle: The fourth halving, less than two years ago, continues to have a cumulative supply shock effect.
• Institutionalization: ETF holdings by BlackRock, Fidelity remain at historic highs.
• Technological evolution: Bitcoin Layer 2, Ethereum Cancun upgrade ecosystem, DeFi cash flow innovations are ongoing.
Markets periodically need such stress tests. a16z crypto partner Chris Dixon summarized, “Wipe out fragile leverage, scare off hesitant speculators, and allow true builders and long-term holders to acquire cheaper chips. After each deep correction, the market’s foundation becomes healthier.”
When prices repeatedly battle at $90,000, the fear index hovers around 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, when it does, your position remains in the game, sowing in panic and 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, aims to provide informational reference, and does not constitute any investment advice. Crypto markets are highly volatile; any investment decision should be based on independent research.