Bitcoin Drops Below $88K: Analyst Warns of a Big Crash if Key Level Breaks
Bitcoin slipped below the $88,000 mark as new on-chain data suggested rising supply pressure rather than structural market stress.
According to Joao Wedson, founder of Alphractal, the recent decline in so-called “lost” Bitcoin is not simply the result of ETF-related flows, but a consequence of economic incentives shifting once Bitcoin approached the psychologically important $100,000 level.
Key Takeaways
- Bitcoin’s drop below $88,000 coincides with dormant supply re-entering the market as higher prices changed economic incentives.
- On-chain data suggests redistribution by long-term holders, not a market collapse or new supply creation.
- Liquidations were heavily skewed toward long positions, totaling over $114 million.
- Daily technical indicators show strong sell signals, but higher-timeframe structure remains intact unless key support levels break.
As prices moved into that zone, coins that had been dormant for years began to resurface. Exchange custody restructuring, address migrations, and UTXO consolidation brought previously inactive Bitcoin back on-chain. At the same time, early holders and long-term whales transitioned into distribution mode, a pattern historically associated with redistribution phases rather than outright market breakdowns.
Price Drops Below $88K as Momentum Weakens
The reactivation of old supply has coincided with short-term price weakness. Bitcoin fell below $88,000 during the latest trading session, with momentum indicators reflecting fading bullish strength. The daily RSI has slipped into the low-40s, pointing to weakening momentum without signaling extreme oversold conditions. Meanwhile, the MACD remains firmly negative, reinforcing the prevailing bearish short-term trend.
Short-term indicators continue to lean bearish. One-day technical readings from TradingView show strong sell signals across both oscillators and moving averages. The majority of tracked indicators currently point lower, reflecting continued downside pressure after Bitcoin failed to reclaim key resistance levels following its rejection near $100,000.
Liquidations Hit Long Positions Hardest
Derivatives markets amplified the move lower. Total Bitcoin liquidations climbed to roughly $127.7 million, with long positions accounting for about $114 million of that total. Short liquidations remained comparatively small at around $13.6 million, indicating that the decline primarily flushed out overleveraged bullish positions rather than attracting aggressive new shorts.
Analysts Say Structure Still Holding – For Now
Despite near-term weakness, not all analysts see a breakdown forming. Merlijn The Trader noted that Bitcoin is still holding its broader market structure. He warned that a weekly close below the 100-week EMA could open the door to a deeper move toward the $69,000 region.
However, as long as that level holds, the larger structure remains intact, with price action carrying more weight than negative headlines.
ENDLESS BAD NEWS.
And yet…
Bitcoin is still holding structure.
A weekly break below the 100 EMA could open a deeper sweep toward $69k.
But as long as this level holds:Structure stays alive.
Markets speak louder than headlines. pic.twitter.com/YlZ4LOk94A
— Merlijn The Trader (@MerlijnTrader) January 29, 2026
The information provided in this article is for educational purposes only and does not constitute financial, investment, or trading advice. Coindoo.com does not endorse or recommend any specific investment strategy or cryptocurrency. Always conduct your own research and consult with a licensed financial advisor before making any investment decisions.
Alexander Zdravkov is a person who always looks for the logic behind things. He has more than 3 years of experience in the crypto space, where he skillfully identifies new trends in the world of digital currencies. Whether providing in-depth analysis or daily reports on all topics, his deep understanding and enthusiasm for what he does make him a valuable member of the team.
