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Bitcoin Plummets Below $85,000: What Is Going On?

BY Benzinga | ECONOMIC | 01/29/26 01:58 PM EST

Bitcoin (CRYPTO: BTC) is down over 5% on Thursday as broader risk-off sentiment sweeps through global markets.

Why Caution Is Warranted

Weakening tech earnings and a hawkish pivot from the Federal Reserve are driving capital out of risk assets.

Crypto trader Jelle highlighted that this is the largest Bitcoin correction since 2021, but it's still far from the biggest drawdown in BTC's history.

Bitcoin has repeatedly recovered from much deeper declines and gone on to set new all-time highs.

Given that track record, it wouldn't be surprising if this correction ends up being another temporary setback before a renewed move higher.

Crypto chart analyst Ali Martinez noted that with the Coinbase premium sitting at -0.14, U.S. spot demand for Bitcoin appears subdued, suggesting limited buying pressure from U.S.-based investors now.

    Despite Short-Term Uncertainty, Not All Is Lost

    He further elaborated that Bitcoin faces short-term uncertainty as the market continues to digest the October deleveraging event, which reduced leverage and risk appetite across crypto.

    Despite this, long-term fundamentals have strengthened, with real institutional engagement around tokenization and blockchain now taking shape.

    Crypto prices have lagged partly due to capital rotating into precious metals like gold and silver, which are absorbing liquidity.

    Historically strong rallies in metals tend to precede, not replace, crypto upcycles, suggesting Bitcoin and Ethereum could benefit once metals cool off.

    Image: Shutterstock

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