Why did Bitcoin drop today? ETF capital flow is weak, and BTC crash is approaching 86,000.

December 16, Bitcoin plummeted to $86,410, casting a shadow over the week’s opening. Why did Bitcoin drop today? The main reasons include weak inflows of spot Bitcoin ETF funds (down 20% quarter-over-quarter), ongoing U.S. trading hours’ curse, and nearly $400 million in liquidation pressure. Cryptocurrency stocks were also impacted, with MicroStrategy (MSTR) and Circle (CRCL) both falling about 7% on the day.

Weak ETF Capital Flows as the Main Drag

The primary reason for Bitcoin’s decline today is the sharp contraction in institutional demand. Strategists note that recent weeks have seen weak inflows into Bitcoin exchange-traded funds, limiting Bitcoin’s upward momentum. A report released by 10X Research on Sunday indicated trading volume is “very sluggish,” down 20% quarter-over-quarter, highlighting “market confidence is lacking, and speculative participation has decreased compared to last week.”

Wall Street institutions are significantly lowering their target expectations. Standard Chartered has cut its year-end Bitcoin price target from $200,000 to $100,000, and the company’s digital asset head Geoff Kendrick has also lowered his 2026 target from $300,000 to $150,000. This sharp downward revision of expectations directly impacts market sentiment, prompting investors to reduce risk exposure.

Compass Point analyst Ed Engel warned investors last week not to chase Bitcoin’s rally. He pointed out that buyers over the past six months purchased Bitcoin at an average cost of about $103,000 per coin. Engel said, “When Bitcoin’s trading price is below this cost basis, investors are more likely to ‘sell on rallies’ rather than ‘buy on dips.’” This psychological factor has intensified selling pressure.

Linh Tran, senior market analyst at XS.com, stated, “Bitcoin is more likely to continue trading within a relatively wide range of $80,000 to $100,000 rather than enter a strong upward trend.” Previously, Bitcoin’s price crashed from an all-time high of about $126,000 set in October to nearly $80,000 last month.

U.S. Trading Hours’ Curse Reasserted

Another key factor behind Bitcoin’s decline today is the ongoing “U.S. trading hours’ curse.” Overnight, Bitcoin trading prices were essentially flat, slightly below $90,000, but earlier in the U.S. Eastern time, the price plummeted to $85,600. This underperformance during U.S. trading hours seemingly indicates weak demand from American investors.

Bespoke Investment revealed startling data on X: “Since the iShares Bitcoin ETF (IBIT) started trading, if you only trade after hours (buy at close, sell at next open), the gains have reached 222%. If you only day-trade (buy at open, sell at close), the loss is 40.5%.” The stark difference suggests ETF mechanics significantly influence price movements.

Cryptocurrency stocks also took a hit early this week, resonating with Bitcoin’s decline. MicroStrategy (MSTR) and Circle (CRCL) both fell about 7%, COIN dropped over 5%, while Robinhood (HOOD) declined around 2%. Many crypto mining stocks closely tied to data center infrastructure, such as CleanSpark (CLSK), Cipher Mining (CIFR), Hut 8 (HUT), and TeraWulf (WULF), all declined over 10%.

In contrast, the Nasdaq index and S&P 500 saw only minor declines, highlighting the weakness in the crypto market. The S&P 500 has gained nearly 16% this year, and Bitcoin is expected to diverge significantly from stocks for the first time since 2014.

Analysis of Three Key Price Levels

$81,000 Core Support: Data from Glassnode shows that Bitcoin’s true market value (the average on-chain purchase price held by active market participants) is close to $81,000, providing strong support during today’s 3.6% decline. This price level represents a large concentration of capitulated coins, and a break below could trigger a deeper correction.

$85,000 Order Book Bids: Examination of exchange order book data reveals that buy orders for the BTC-USDT trading pair (the most liquid trading pair) are concentrated around $85,000, which may prevent further downside and offer short-term support.

$92,000 to $94,000 Resistance Zone: Analyst Ted Pillows indicated that if Bitcoin can hold the $81,000 support, it could target the next major resistance zone between $92,000 and $94,000.

On-Chain Data Shows Whales Retreating

(Source: Trading View)

Bitcoin’s decline today can also be explained through on-chain data. Crypto analyst Darkfost observed that, compared to previous years, the inflow of funds from “whales” (transactions exceeding 1 BTC) into Binance is sharply decreasing. Currently, the average annual Bitcoin trading volume is about 6,500 BTC, a level unseen since 2018.

Darkfost explained, “Unlike before, even as Bitcoin prices continue to rise, the inflow of whale funds into Binance is steadily declining, not increasing as in past bull cycles.” This abnormal phenomenon indicates that large investors are quietly exiting, rather than continuously accumulating as during previous bull markets.

Today’s Bitcoin liquidation volume approaches $400 million, pushing the price toward the crucial 2-year support level maintained since 2023. The weekly RSI has fallen to around 30, indicating increasing bearish pressure but nearing levels where downward momentum typically begins to slow. If support at $81,000 holds, short-term prices are expected to rebound to the $90,000–$95,000 zone.

Jasper De Maere, OTC trader at Wintermute, wrote in a Monday report: “The lack of a clean, sharp rally before the year-end has made the market fragile in the short term, but so far, the price action reflects consolidation and position unwinding rather than a full-blown risk-off mood. This looks more like a year-end digestion process rather than a structural systemic shift.”