Bitcoin is struggling to avoid a fourth consecutive monthly decline as the cryptocurrency market grapples with a fundamental shift in momentum that has left most investors underwater.
Data from CryptoSlate indicate that the largest digital asset fell almost 7% in the past 24 hours to $82,513.
According to CoinGlass data, long traders who speculated on the BTC price were liquidated for more than $750 million during the price drop shock. This is the highest loss level for this cohort of traders since last November.
Consequently, BTC is on track to undergo its fourth consecutive red month as the crypto asset lost more than 5% of its value in January.
This follows a loss of 3.99% in December and a sharp decline of 17% in November. BTC fell 4% in October.
BTC loses 2-year moving average
Meanwhile, poor price performance this year has led to the flagship digital asset falling below its two-year moving average for the first time since 2022.
Bitcoin analyst Joe Consorti added:
“We have also lost the November 2025 low and are still 7% away from losing the 2025 annual low.”
Data from Alphractal highlights the importance of this shift, noting that the last time BTC traded below this level was in October 2023.
This disruption revives a simple but historically powerful signal. For many analysts, the loss of the 2Y SMA signals the start of a true capitulation cycle.
Historical data suggests that almost every time Bitcoin’s price falls below this average, the market has experienced further downside or entered a prolonged accumulation phase that lays the foundation for the next bull cycle.
The October liquidation shock restarted the cycle
The current regime dates back to October 10, 2025, when the crypto market experienced one of the largest forced collapses ever.
A wave of liquidations followed renewed headlines about tariffs and export controls from Washington, leading to rapid deleveraging on major trading platforms and a reduction in market depth in the days that followed.
Bitcoin had reached an all-time high of over $126,000 earlier that month, but the liquidation episode helped pull the market out of its previous structure and reprice risk around macro news rather than internal crypto catalysts.
The wave of liquidations totaled more than $19 billion, underscoring how much of the cycle’s upside potential was financed by debt rather than sustainable spot market demand.
That shift matters because the market has never shown the kind of rapid, confidence-restoring recovery that typically signals a resumption of the trend.
Instead, the price action evolved into an arduous process of position reduction, with the upswing repeatedly stalling and reinforcing the sense that the market has moved from expansion to consolidation.
ETF flows stabilize, but the bid has not been rebuilt
The most visible sign of the demand slowdown was in the US spot Bitcoin ETFs, which helped drive previous waves of accumulation but have recently shifted to a more neutral stance.
Glass junction said US Bitcoin ETF net inflows have returned to equilibrium, with the 30-day moving average hovering around zero after a period of sustained outflows.
This change indicates that mechanical selling pressure has diminished, but also implies that the aggressive inflows that previously absorbed new supply have not returned.
Glassnode has also framed the market as pegged levels based on cost, which now serve as inflection points. The company set its short-term cost base at about $96,500, a level that has repeatedly limited recovery efforts.
Below the market, Glassnode highlights a stressed support band around $83,400, with a “True Market Mean” near $80,700 if weakness deepens.
Alphractal CEO Joao Wedson issued a stark warning regarding this particular zone, stating that Bitcoin “cannot lose $81,000 under any circumstances” based on on-chain analysis.
Wedson warned that if this level is breached, a capitulation process similar to 2022 could occur, with the next major support level being significantly lower at around $65,500.
Metals are rising and Washington is injecting policy risks
Crypto internal cooling has evolved alongside a macro tape that has rewarded traditional havens.
Gold and silver hit new records in early 2026 as investors turned to hard assets amid policy uncertainty and geopolitical risks, a shift that has sharpened the contrast with Bitcoin’s sideways move.
Washington has also become part of the price action. Senators introduced a market structure bill in mid-January to clarify oversight and establish guardrails for key products, including limits on interest-like rewards paid for holding stablecoins, while still allowing activity-based incentives tied to usage.
The short-term problem, however, is that policy progress has been uneven.
After the draft circulated, Coinbase CEO Brian Armstrong said the company could not support the bill in its then-form, delaying key Senate discussions and making investors more cautious about timelines.
In light of this, Bitwise CIO Matt Hougan said the legislative outcome creates two different routes for pricing.
“If Clarity succeeds… I suspect the market will rise sharply,” he says saidarguing that a framework that investors can subscribe to would advance expectations around stablecoins and tokenization.
However, Hougan said the market is more likely to demand evidence of real-world adoption before rewarding prices if legislation fails.
A leverage-driven market, with liquidity signals indicating caution
Even with moderate price action, some analysts argue that the decline looks more like a cyclical reset than a structural collapse.
Glassnode described a consolidation regime driven more by absorption than expansion, with leverage already reduced in some markets and spot participation still muted.
That framework fits with the broader idea that recent lows have often been caused by the crowding out of leveraged positions, rather than by an apparent collapse in long-term beliefs.
Still, short-term liquidity gauges remain uncomfortable.
One widely watched indicator, the Coinbase Bitcoin premium index, has remained negative for an extended period in January, around -0.16% in recent readings, suggesting US spot prices are weaker than the global average.
At the same time, the amount of “dry powder” on the market is showing signs of shrinking.
Facts from CryptoQuant indicate a contraction in the overall supply of stablecoins, a dynamic that traders are watching because stablecoin growth often correlates with incremental buying capacity within the crypto ecosystem.
All told, the setup leaves the market with two clean paths that traders have already mapped out.
- The Bull Case: A higher trend, made possible by a return of sustained demand in the spot market that could lift prices back above the $96,500 short-term cost basis for holders.
- The bear case: A continuation of the consolidation regime, with downside risk concentrated around the $83,400-$80,700 band. However, if liquidity fails to improve and the $81,000 bottom identified by Alphractal collapses, defensive positioning could amplify the pullback towards the mid-$60,000s.