Bitcoin crashes below $90,000: leverage liquidations and ETF outflows trigger market volatility

Bitcoin experienced a significant decline on January 8, 2026, breaking below the key psychological level of $90,000 and dropping to around $89,600. This drop triggered a massive liquidation of leveraged positions, with nearly $150 million in long positions forcibly closed within just one hour. Over the past 24 hours, total liquidations reached as high as $464 million. The overall cryptocurrency market capitalization fell from $3.21 trillion on January 7 to $3.09 trillion.

Market Volatility Overview

On January 8, 2026, the Bitcoin market experienced intense volatility, with prices rapidly falling from approximately $91,000, breaking through the critical psychological level of $90,000, and reaching a low of about $89,600.

This flash crash was not an isolated event; it occurred after significant outflows from US spot Bitcoin ETFs. The day before the crash, these products recorded a net redemption of $486 million, described as the largest single-day outflow since November 20, 2025. The liquidation wave quickly swept through the market. According to CoinGlass data cited by Finbol, around 07:00 UTC, long positions were liquidated for $88.23 million. An hour later, another $57.02 million in longs were wiped out.

Liquidation Impact and Market Chain Reactions

The liquidation wave caused concentrated shocks to Bitcoin and major altcoins, with Bitcoin being the most affected asset, with liquidations totaling $66.53 million, nearly twice that of Ethereum. Ethereum’s liquidation amount was $33.78 million. The market chain reaction was not limited to Bitcoin; many digital assets turned bearish on the daily chart. Ethereum fell 2.8%, trading at $3,125; XRP saw over $6 million in positions liquidated within the same window, dropping 6.8% to $2.10.

The total market cap of cryptocurrencies declined by 2.19%. According to CoinMarketCap data, the market cap dropped from $3.21 trillion on January 7 to $3.09 trillion at the time of writing.

Institutional Activity and Market Context

The intense market volatility occurred against a backdrop of complex institutional activity. Morgan Stanley filed for spot Bitcoin, Ethereum, and Solana ETFs on January 5. Hours later, global index provider MSCI announced it would no longer pursue plans to remove Bitcoin-heavy companies from its main indices. This decision provided short-term relief to the market, reducing the risk of forced selling related to index rebalancing.

A timeline shows that since MSCI proposed to exclude digital asset debt companies from global indices in October 2025, the market has experienced ongoing volatility. Bitcoin dropped nearly $18,000 within minutes in October.

Expert Analysis and Market Outlook

A recent report from JPMorgan indicates that the crypto market sell-off may be nearing its end. Analyst Nikolaos Panigirtzoglou stated that the outflows from Bitcoin and Ethereum ETFs began to stabilize in January, and futures market positioning indicators also suggest that investor deleveraging since late 2025 has largely completed. The bank believes market liquidity remains healthy, and this correction was mainly driven by de-risking triggered by MSCI’s statement last October about potentially excluding crypto-related companies, rather than market pressure.

Wenny Cai, COO of SynFutures, said: “Although 2026 has started strong with positive structural developments… Bitcoin has struggled to stay above $90,000, driven by several factors.”

Bitcoin Price Trends and Data

The table below shows recent Bitcoin price performance, illustrating the specific trajectory of price fluctuations:

Looking at historical performance, since the peak in October 2025, Bitcoin has undergone a significant correction, but its long-term fundamentals remain solid.

Illia Otychenko, Chief Analyst at CEX.IO, said: “Bitcoin falling below $90,000 reflects the fading momentum at the start of the year.” He added, “The new allocations and favorable geopolitical headlines at the beginning of 2026 initially helped, but they are not enough to sustain the rally.”

Safety Tips for Trading on Gate Platform

When trading cryptocurrencies on Gate, risk management is crucial, especially during periods of increased market volatility. Using leverage trading requires extra caution, ensuring proper stop-loss orders are set to limit potential losses. Market volatility offers opportunities for experienced traders, but for beginners, understanding how leverage works is essential. Excessive leverage can amplify losses, especially during rapid price swings, potentially leading to forced liquidation.

It is worth noting that MSCI has decided not to exclude crypto-related companies from its global index review in February 2026, providing short-term relief to the market and reducing the risk of forced selling related to index movements. JPMorgan also reported that market liquidity remains healthy, and this correction was mainly driven by de-risking rather than market pressure.

Bitcoin’s price has rebounded above $91,000 after briefly falling below that level, though it still declined 1.7% intraday. The overall crypto market cap has decreased from $3.21 trillion on January 7 to $3.09 trillion, down 2.19%. In volatile markets, cautious position sizing and risk management strategies are especially important. As institutional participants continue to enter the space and regulatory frameworks mature, Bitcoin’s long-term outlook remains robust. From the discount trading of Bitcoin holdings by companies like MicroStrategy to direct Bitcoin holdings or ETF investments, the market structure is adapting to institutional demand.