Greed

Bitcoin

when

Real

<h3 class="wp-block-heading" id="h-key-insights"><strong>Key Insights:</strong></h3>
<ul class="wp-block-list">
 <li>Analyst attributes the ongoing Bitcoin price drop to a surge in long liquidations, not selling on exchanges.</li>
 <li>Bitcoin USD investors show extreme fear, but analysts think it is a sign of future price rallies.</li>
 <li>Bitcoin is back above the average cost basis of the spot ETF, indicating renewed commitment from institutional investors</li>
</ul>
<p>Some industry leaders have commented on the main reason behind the recent Bitcoin (BTC) price drop to the $85,000 support level. Amid these comments, crypto investors are exhibiting fear as indicated by the Fear &amp; Greed Index.</p>
<p>Also, Bitcoin is back above the spot exchange-traded fund (ETF) cost basis.</p>
<h2 class="wp-block-heading" id="h-liquidations-impact-on-bitcoin-price"><strong>Liquidations Impact on Bitcoin Price</strong></h2>
<p>CryptoQuant, a well-known onchain data analytical platform, has attributed the <a href="https://www.thecoinrepublic.com/price-prediction/bitcoin/">BTC price</a> drop to $85,000 to liquidations, rather than spot selling.</p>
<p>The platform released a Bitcoin price chart that showed sharp drops coincided with spikes in long liquidations. According to <a href="https://x.com/cryptoquant_com/status/2000841502696858057" target="_blank" rel="noreferrer noopener nofollow">CryptoQuant</a>, BTC USD traders accumulated so many highly leveraged long positions in futures markets.</p>
<div class="wp-block-image">
 <figure class="aligncenter size-full">
  <img loading="lazy" decoding="async" width="595" height="562" src="https://www.thecoinrepublic.com/wp-content/uploads/2025/12/image-427.png" alt="Bitcoin Price Crash Analysis | Source: CryptoQuant" class="wp-image-1594842" srcset="https://www.thecoinrepublic.com/wp-content/uploads/2025/12/image-427.png 595w, https://www.thecoinrepublic.com/wp-content/uploads/2025/12/image-427-300x283.png 300w, https://www.thecoinrepublic.com/wp-content/uploads/2025/12/image-427-150x142.png 150w" sizes="auto, (max-width: 595px) 100vw, 595px">
  <figcaption class="wp-element-caption">
   Bitcoin Price Crash Analysis | Source: CryptoQuant
  </figcaption>
 </figure>
</div>
<p>These positions are usually common in bull markets when optimism is high, and require maintaining a certain margin. Thus, if the price drops even a little, the position can fall below the required margin, triggering automatic closure by the exchange.</p>
<p>The result is that even a small initial price dip triggers some liquidations. This turns a modest decline into a sharp crash, even without new fundamental bad news.</p>
<p>In the current market dynamics, CryptoQuant views the liquidation as a healthy flush-out of excessive speculation and leverage. However, the platform does not think it is a loss of real demand for Bitcoin.</p>
<p>They believe the market will stabilize once all over-leveraged positions are liquidated. Their expectation is based on the fact that there will be less fragile positioning left to break.</p>
<p>CryptoQuant emphasized that the big open question is whether enough leverage has been cleared for the market to become healthier.</p>
<h2 class="wp-block-heading" id="h-extreme-fear-dominates-the-bitcoin-usd-market"><strong>Extreme Fear Dominates the Bitcoin USD Market</strong></h2>
<p>CoinGlass, another popular crypto data platform, also commented on the state of the market and investor sentiments.</p>
<p>The platform spotlighted the Crypto Fear and Greed Index, firmly at the extreme fear territory with a reading of 10. This reading reports on the ongoing Bitcoin (BTC) price drops, weakness, and heavy liquidations.</p>
<div class="wp-block-image">
 <figure class="aligncenter size-full">
  <img loading="lazy" decoding="async" width="597" height="610" src="https://www.thecoinrepublic.com/wp-content/uploads/2025/12/image-428.png" alt="Crypto Fear &amp; Greed Index Chart | Source: Coinglass" class="wp-image-1594848" srcset="https://www.thecoinrepublic.com/wp-content/uploads/2025/12/image-428.png 597w, https://www.thecoinrepublic.com/wp-content/uploads/2025/12/image-428-294x300.png 294w, https://www.thecoinrepublic.com/wp-content/uploads/2025/12/image-428-150x153.png 150w, https://www.thecoinrepublic.com/wp-content/uploads/2025/12/image-428-300x307.png 300w" sizes="auto, (max-width: 597px) 100vw, 597px">
  <figcaption class="wp-element-caption">
   Crypto Fear &amp; Greed Index Chart | Source: Coinglass
  </figcaption>
 </figure>
</div>
<p>The index is a gauge for the crypto market, primarily focused on BTC, but reflecting broader <a href="https://www.thecoinrepublic.com/2025/12/16/crypto-market-crash-heres-why-the-crypto-prices-are-going-down-today/">crypto sentiment</a>.</p>
<p>After the recent sharp Bitcoin USD decline, investor psychology has shifted to panic. People are worried, selling off positions, and avoiding risk, classic signs of fear overriding the market.</p>
<p>In crypto bull cycles, these extreme fear dips have frequently marked local bottoms before rallies resume.</p>
<p>Accordingly, Coinglass has encouraged traders and investors not to panic-sell but to see the dip as a potential setup for accumulation.</p>
<p>As of this writing, BTC price has declined by 4% over the previous day to trade at $86,282. The trading volume, however, rose 23.2% to $46.64 billion, suggesting investors renewed interest.</p>
<h2 class="wp-block-heading" id="h-btc-price-back-above-spot-etf-cost-basis"><strong>BTC Price Back Above Spot ETF Cost Basis</strong></h2>
<p>Furthermore, CryptoQuant analyst Maartunn noted that Bitcoin is back above the average cost basis of the spot ETF. This is a bullish signal amid the ongoing BTC price correction.</p>
<p>The analyst explained that the cost basis flip suggests institutions are now back in unrealized profit territory overall.</p>
<div class="wp-block-image">
 <figure class="aligncenter size-full">
  <img loading="lazy" decoding="async" width="598" height="531" src="https://www.thecoinrepublic.com/wp-content/uploads/2025/12/image-429.png" alt="Bitcoin Cost Basis and ETF Outlook | Source: JA Maartunn" class="wp-image-1594854" srcset="https://www.thecoinrepublic.com/wp-content/uploads/2025/12/image-429.png 598w, https://www.thecoinrepublic.com/wp-content/uploads/2025/12/image-429-300x266.png 300w, https://www.thecoinrepublic.com/wp-content/uploads/2025/12/image-429-150x133.png 150w" sizes="auto, (max-width: 598px) 100vw, 598px">
  <figcaption class="wp-element-caption">
   Bitcoin Cost Basis and ETF Outlook | Source: JA Maartunn
  </figcaption>
 </figure>
</div>
<p>Typically, when the price is below the cost basis, it leads to a higher risk of outflows from the spot Bitcoin ETFs.</p>
<p>In contrast, when the price is above, it means more incentive to hold or buy dips. This is because institutional investors are in the green, and less pressure to sell.</p>
<p>It is also important to note that the BTC ETF market has gained increased investor adoption since launching in 2025. So far, the spot Bitcoin ETFs hold approximately 7.8% of the 21 million Bitcoin USD supply.</p>
<p>ETF analyst Nate Geraci pointed out trends that suggested crypto could go mainstream in 2026.</p>
<p>This projection comes as at least 190 public companies hold BTC in their balance sheets. Their holdings quadrupled in 2025, and was led by Strategy Inc.</p>
<p>The post <a href="https://www.thecoinrepublic.com/2025/12/16/heres-the-real-reason-bitcoin-price-collapsed-to-85000-support/">Here’s the Real Reason Bitcoin Price Collapsed to $85,000 Support</a> appeared first on <a href="https://www.thecoinrepublic.com">The Coin Republic</a>.</p>

Here’s the Real Reason Bitcoin Price Collapsed to $85,000 Support

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