Bitcoin suddenly "dipped" to $24,000. What exactly happened?

On Tuesday late night, Bitcoin staged a terrifying moment on the Binance BTC/USD1 trading pair, with the price instantly plunging in a needle-like drop to $24,111, but quickly rebounding within seconds to above $87,000. This 72% instantaneous drop occurred only in the USD1 stablecoin trading pair launched by World Liberty Financial, supported by the Trump family, while other mainstream trading pairs remained unaffected.

The Truth Behind the Needle Event: USD1 Liquidity Trap

The abnormal market behavior on Binance was not a systemic market collapse, but a liquidity incident specific to certain trading pairs. USD1 is a stablecoin supported by World Liberty Financial, backed by the Trump family. As a newly issued trading pair, it has limited market makers and less tight quotes, leading to a severe lack of order book depth. In such a situation, a large market sell order, liquidation, or automated trading routed through this pair can quickly wipe out buy orders, causing the transaction price to momentarily fall far below the true market level.

Market microstructure experts point out that these “wick” events highlight the risks of executing trades on trading pairs with insufficient liquidity. Newly issued or infrequently traded stablecoin pairs often have very weak capacity to absorb large orders; a single order worth hundreds of thousands of dollars can cause dramatic price swings. Additionally, brief pricing issues can trigger anomalies, such as sudden widening of spreads, incorrect market maker quotes, or trading bots reacting to abnormal transaction prices.

During periods of relatively light trading, due to fewer participants and weaker capacity to absorb shocks, the impact of abnormal volatility can be amplified. Although the needle-like spikes on the chart appear extreme, traders usually see them as microstructure events rather than signals of a trend reversal in Bitcoin. However, for leveraged long traders holding positions in this pair, this needle event may have triggered forced liquidations, resulting in actual losses.

Gold and Silver Seize Trillions, Bitcoin Becomes the Orphan

What is truly worth noting is not the technical needle event, but the structural capital flow out of Bitcoin. According to Walter J. Zimmerman Jr. from ICAP Technical Analysis, investors are rotating funds from Bitcoin into precious metals. Since peaking on October 6, Bitcoin has fallen over one-third, dropping from its $126,000 all-time high to the current $87,700. Meanwhile, gold has risen about 15% and hit a new all-time high, with silver surging approximately 50%.

Based on price trends and capital flow evidence, Zimmerman believes there is a causal link: “We see funds flowing out of Bitcoin and into gold and silver.” Digital assets seem to be missing out on the “Santa Claus rally” sweeping the stock market, with the S&P 500 reaching record highs, while Bitcoin continues to weaken.

CryptoQuant analysts point out that the current market shows divergence: amid rising uncertainty, capital flows into safe-haven assets, pushing gold and silver higher; meanwhile, Bitcoin is still viewed as a risk asset, with weak new demand, and short-term holders’ selling pressure limits its upside potential. Under baseline scenarios, safe-haven assets will still be supported, but Bitcoin’s upward potential will remain constrained until sustainable new demand emerges.

Institutional Selling and Sentiment Collapse Create a Vicious Cycle

As we approach the final weeks of 2025, Bitcoin is caught in a vicious cycle of institutional selling and sentiment collapse. According to the latest data released on December 22, Bitcoin ETFs still recorded over $140 million in net outflows, indicating that capital outflows remain a key market characteristic.

(Source: CryptoQuant)

From the perspective of open interest, it has slightly rebounded above $28 billion, but considering this increase coincides with recent Bitcoin price declines, the market is more inclined to believe that the new capital is not coming from fresh longs, but rather from the accumulation of short positions.

(Source: CMC)

Market sentiment remains fragile. The Crypto Fear & Greed Index hovers around 27, in the “fear” zone, showing no clear short-term recovery. Persistent low sentiment suggests that current conditions are not conducive to sustained Bitcoin demand recovery. As long as the index cannot return to at least a “neutral” zone, lack of confidence may continue to restrict demand growth.

The second-largest cryptocurrency, Ethereum, fell 1.5%, breaking below $3,000. Other small-cap tokens also performed poorly: XRP declined 1.5%, Solana dropped 2%, Dogecoin fell 2%. The entire crypto market shows collective fatigue, lacking obvious catalysts for a rebound.

Key Technical Levels Determine Future Direction

(Source: Trading View)

Although short-term rebounds have occurred multiple times, the most critical technical structure currently dominating Bitcoin’s price performance remains the long-term downtrend line extending from the all-time high. RSI still maintains a downward slope and is below the neutral level of 50, indicating that the average momentum over the past 14 trading days remains bearish. The MACD histogram is gradually approaching zero; if it continues to cross below and enters negative territory, it will reinforce the view that Bitcoin may weaken further in the short term.

Investtech points out that: “In the short term, Bitcoin is in a downward trend channel. This indicates that investors are selling at lower prices and exiting the asset over a period.” As long as capital outflows continue and short positions increase, this pattern is likely to remain a core pillar supporting continued selling pressure on Bitcoin at year-end.

Key Technical Observation Points for Bitcoin

$92,292 Resistance Level: Corresponds with the long-term downtrend line and the 50-period SMA; breaking above this level would weaken the bearish structure.

$85,430 Oscillation Zone: Recent weekly low point; maintaining above this level could form a short-term range-bound consolidation.

$80,413 Major Support: Close to the 2025 lows; breaking below could trigger a stronger bearish dominance pattern.