Bitcoin drops to $87,800: Market pressure amid macro risks and the Davos meeting

In the latest market background analysis, Bitcoin’s price plummeted to the $87,880 range, retreating from the earlier $90,000 high. This decline not only reflects the volatility inherent in digital assets but also deeperly indicates the global market’s risk aversion attitude. In the current environment, Bitcoin’s performance has become a key indicator of global risk appetite, with its fluctuations providing a window into market psychology.

Market Sentiment Shift Behind Price Fluctuations

During the midweek, Bitcoin’s rebound momentum abruptly halted. The rally that broke through $90,000 in the morning lost momentum during European midday, with the price ultimately hovering around $87,880. This rapid reversal is not an isolated phenomenon—major risk assets worldwide are experiencing similar pressure.

European stock markets led the decline globally, with the Stoxx 600 index falling 0.5%, marking its worst weekly performance since November, with four consecutive trading days of decline. Financial sectors such as banking and insurance performed particularly poorly. The support previously provided by the bond market also weakened, with European yields declining less sharply. In stark contrast, gold prices performed strongly—precious metals broke a new all-time high of $4,860 per ounce, rising 2%. This surge in traditional safe-haven assets clearly indicates that investors are massively withdrawing risk positions and shifting toward protective asset allocations.

Dual Pressure from Political Risks and Macroeconomics

The current global market pressures can be traced back to several key factors. Chief among them is the escalation of trade conflicts between U.S. President Trump and Europe. At the upcoming World Economic Forum in Davos, Trump threatened to impose tariffs on Europe and defended plans to control Greenland. These remarks have sparked concerns over the global trade order, further damaging the attractiveness of risk assets.

While the dollar has barely maintained its annual gains, it is under pressure, and major currencies like the euro and pound are being noticeably suppressed. Such macroeconomic uncertainties directly transmit to the crypto market, with digital assets’ risk attributes making them most sensitive to changes in global liquidity preferences.

On Tuesday, the market experienced a massive liquidity liquidation—over $1 billion in crypto derivatives positions were forcibly closed. Although a brief rebound in Japanese government bonds during Wednesday’s early trading alleviated some pressure, this recovery was extremely fragile and insufficient to counteract ongoing macroeconomic stresses.

Traditional Asset Safe-Haven Flows Highlight Risk Aversion

The safe-haven behavior in traditional financial markets provides a macro backdrop for the pressure on digital assets. U.S. stock futures declined slightly, confirming that investors’ cautious attitude toward risk assets is spreading globally. Gold breaking through the $4,860 high confirms that investors are massively shifting toward the most classic protective assets—an unmistakable signal of worsening risk sentiment.

In such a market environment, high-risk assets like Bitcoin naturally become less favored. The cryptocurrency market is digesting the aftermath of the previous liquidity liquidation, with market participants still assessing the deep structural impacts of these forced liquidations.

On-Chain Data Reveals Support Pressure and Concentrated Risks

From an on-chain data perspective, the market shows a fragile balance. About 63% of Bitcoin investors have a cost basis above $88,000, indicating that most participants are currently at a loss. This data suggests a lack of new buying support in the market, with holders more likely to cut losses during rebounds.

Further analysis of supply concentration exposes the market’s vulnerability. The $85,000 to $90,000 range contains a large amount of liquidity and market participants, making this price band a critical resistance zone. More concerning is that support below $80,000 is nearly illusory; once breached, greater downside risks will emerge.

This on-chain structure implies that, under current macro pressures and risk aversion, Bitcoin lacks strong technical support. The market needs breakthrough positive news or substantial macroeconomic improvements to reverse the current downward trend. The Davos summit and Trump’s speeches could serve as key catalysts for the market’s near-term direction.