You’ve probably seen the red candles. It feels like every time we think the market is about to punch through the six-figure ceiling, someone yanks the rug. Bitcoin recently hit an all-time high of $126,272.76 back in October 2025, but the start of 2026 hasn't exactly been a victory lap. Instead, we’re watching a tug-of-war between the $90,000 support and the psychological wall of $100,000.
Honestly, it’s frustrating.
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One day we're up 5% because Michael Saylor’s Strategy (formerly MicroStrategy) bought another $1.3 billion haul, and the next, we're sliding because a technical pattern looks "snake-like." If you’re asking why is bitcoin falling, you aren’t alone. Even the experts are split. Is this a healthy correction or the start of a long, cold winter? Let's get into the weeds of what’s actually happening on the ground right now.
The Hangover of 2025 and the Bear Market Rally
To understand why the price is dipping today, we have to look at the mess of late last year. Most people expected 2025 to be the "moon" year. We had the 2024 halving, the ETFs were vacuuming up coins, and a crypto-friendly White House was moving in. But instead of a parabolic explosion, Bitcoin ended 2025 down about 6%.
Arthur Hayes, the co-founder of BitMEX, put it bluntly: Bitcoin performed like "dog shit" last year because it followed dollar liquidity lower. It turns out, even with institutional hype, if there isn’t enough cash sloshing around the system, the price just crabs.
The October 10 Flash Crash
A huge reason for the current jitters is the ghost of October 10. That single day wiped out $1.4 trillion from the crypto markets. It wasn't just a price drop; it was a systemic failure of overleveraged positions. When that many people get liquidated at once, it leaves a scar. Investors are still gun-shy, and whenever the price starts to slip, the trauma of October 10 makes them hit the "sell" button faster than usual.
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The 365-Day Line in the Sand
CryptoQuant researchers are currently calling this recent bounce a "bear market rally." They point to the fact that Bitcoin broke below its 365-day moving average. In their eyes, that’s the dividing line between a bull and a bear. Until we decisively break back above that line—which currently sits around $101,448—the big money is treating every pump as an opportunity to exit, not an invitation to buy.
Regulation, Politics, and the "Clarity" Problem
You’d think a pro-crypto administration would mean "up only," but the reality is more complicated.
The market is currently obsessing over the Clarity Act. This bill is supposed to finally settle the turf war between the SEC and the CFTC. On one hand, Bitwise CIO Matt Hougan thinks its passage is a huge "green light." On the other, Coinbase CEO Brian Armstrong recently threw a wrench in things by speaking out against the current draft. This kind of infighting in D.C. makes big institutional desks nervous. They don't like uncertainty. When the rules of the game are still being rewritten, they tend to pull back and wait.
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Then there's the macro stuff.
- Inflation is a moving target: Everyone was waiting for the December CPI data. If inflation stays above 3%, the Fed might hold rates higher for longer. Higher rates mean a stronger dollar, and a stronger dollar usually means Bitcoin falling.
- The "Strategic Reserve" debate: While the U.S. government denied selling off forfeited Samourai Wallet coins, the uncertainty of how the government will handle its "Strategic Bitcoin Reserve" creates a weird ceiling on the price.
- Geopolitics: When President Trump dials down tensions in the Middle East, like he did recently with Iran, "risk-off" assets like gold and Bitcoin sometimes lose their "chaos premium."
The Quantum Boogeyman and Jefferies' Pivot
This one caught a lot of people off guard. Recently, an analyst at Jefferies dumped their Bitcoin holdings in favor of gold. The reason? Quantum computing fears. While it sounds like science fiction, the concern is that sufficiently powerful quantum computers could eventually crack the digital signatures that keep Bitcoin safe. While developers are already working on "quantum-resistant" upgrades, the mere mention of it by a major firm like Jefferies was enough to spook some of the old-school institutional crowd. It’s a niche fear, sure, but in a fragile market, it’s one more reason to sell.
Why is Bitcoin Falling? It's a Liquidity Story
At the end of the day, it's about the "pipes."
Stablecoin liquidity has been contracting.
Demand for ETFs, while positive, isn't "extraordinary" compared to last year.
When you look at the on-chain data, spot demand is actually shrinking.
Think of it like a car. You can have the best engine in the world (the Bitcoin network), but if there’s no gas in the tank (liquidity), you aren’t going anywhere. Right now, the tank is running low. We’re seeing a rotation of capital into other sectors, too. Small-cap stocks and even gold—which appreciated 65% in 2025 while Bitcoin slipped—are stealing the spotlight.
Is the "Four-Year Cycle" Dead?
We used to rely on the halving cycles like clockwork. But the market has changed. With the introduction of the ETFs, the price is much more tied to the 401(k)s of average people and the whims of Wall Street than it is to the supply of new coins. As Conor Mulcahy noted in Bitcoin Magazine, the cycle is no longer just about halvings; it's about global debt cycles. With $9 trillion in U.S. debt maturing in 2026, the government might be forced to print money to cover it. That’s the "ladder" bulls are waiting for.
What to Watch Next
If you’re looking for a bottom, keep your eyes on these specific levels:
- The $94,000 Support: If we stay above this, the "bear market rally" might actually turn into a real trend.
- The $101,448 Moving Average: This is the big boss. A clean break and hold above this level would signal that the bear market is officially over.
- February 16: The "Year of the Snake" ends. It sounds superstitious, but crypto markets have a weird way of following sentiment shifts tied to the calendar.
Actionable Steps for the Nervous Investor
If the volatility is making you lose sleep, you might want to look at your "cost basis." Data shows that about 80% of coins transacted in the last month came from people who bought at higher prices. That’s classic capitulation. The "weak hands" are being flushed out.
- Check your leverage: If you're trading with more than 2x or 3x leverage, you're essentially gambling in this environment.
- Watch the FASB rules: New accounting rules went live on January 1st that allow companies to report Bitcoin profits more easily. This could lead to a wave of corporate buying in Q2 and Q3 as earnings reports come out.
- Follow the whales: Monitor exchange reserves. They are currently at their lowest levels since 2018. If the supply is thin, it won't take much new demand to send the price back toward $120,000.
The current dip isn't a death spiral. It's a reset. The market is shaking out the excess from 2025 and waiting for the next big liquidity injection. Whether that comes from Fed rate cuts or a new wave of corporate adoption remains to be seen.