Bitcoin’s price has plummeted from 126,000 dollars to below 90,000 in a matter of weeks. It has been a volatile final quarter for the leading crypto asset as sentiment has shifted sharply negative, even though Strategy continues to add BTC to its balance sheet, and long-term forecasts remain bullish.
Some relief arrived after the Federal Reserve rate cut helped spot Bitcoin recover from $84,000 to around $92,000. However, shortly after the rate cut was confirmed, the price dropped back to $90,000, and many analysts suggest the bulls will need to reclaim $100,000 before confidence truly returns.
Broader macroeconomic uncertainty has also intensified downside pressure. US growth concerns, rising geopolitical tensions with China, and fears of an AI-driven tech bubble have all contributed to risk-off conditions.
All eyes are now on whether Bitcoin’s drop is temporary and when a sustained reversal could begin, potentially pushing the asset toward a new all-time high. The question on every crypto derivatives trader's mind following the FED’s rate cut is “Why is Bitcoin Dropping?” and when will the trend reverse.
Bitcoin price chart. Source: CoinMarketCap
Bitcoin Bear Market?
Has the Bitcoin price drop pushed the market into bear-market territory? The short answer is yes if measured using the standard definition, where a bear market is confirmed when BTC trades at least 20% below its all-time high. At around $90,000, Bitcoin is currently trading roughly 30% below its peak of $126,000.
There are other warning signs reinforcing this bearish outlook. Liquidity has declined sharply, selling pressure has intensified, and inflows into US spot Bitcoin ETFs have slowed as investor confidence has weakened.
However, this does not tell the full story. Zooming out reveals a very different picture. Over the past five years, Bitcoin has delivered gains of more than 400%, outperforming almost every traditional asset class. It has also achieved greater institutional acceptance, global ETF recognition, and stronger regulatory clarity across the US and Europe.
So, while the current drawdown technically meets the bear-market definition, it is just as reasonable to argue that 2025 has been a highly bullish year overall, even if recent sentiment has turned negative.
Although the FED cut of 25 basis points gave Bitcoin some short-term momentum, pushing it to around $92,000, the surge was short-lived, with the price quickly returning to $90,000.
Why a FED Rate Cut May Not Save BTC from Dropping Below $90,000
The FED has provided some temporary support to Bitcoin bulls. In the build-up to the latest rate cut, Bitcoin climbed steadily and briefly touched just under $93,000 before slipping back to just above $90,000. While this helped boost confidence after weeks of selling pressure, BTC is still trading more than 25 percent below its all-time high, which shows that the recovery is far from complete.
Market behaviour suggests that many traders still expect further downside. Recent positioning in the options market shows a notable increase in protective put contracts placed around the $89,000 strike level. This signals that a large portion of traders are preparing for a potential breakdown if bullish momentum does not return soon.
Liquidity has also continued to weaken as investors wait for clearer signals from macroeconomic data. ETF inflows have slowed significantly, and spot trading volume has failed to rebound in line with past bullish reversals, which indicates that capital is sitting on the sidelines.
All of this highlights a growing sensitivity to Federal Reserve policy. Every meeting, every speech, and every hint about future rate decisions now has an immediate effect on Bitcoin’s price. Until the FED delivers a more aggressive easing stance, there is a real possibility that BTC could fall back below $90,000 before any long-term recovery begins.
Risk-off Mood Deepens as Strategy Concerns Emerge
Risk appetite across financial markets has weakened, with traders shifting away from volatile assets. Bitcoin has been caught in this rotation. Concerns around the health of Strategy, the largest corporate holder of BTC, are adding further selling pressure.
Business Insider reported that Strategy owns close to three percent of the total Bitcoin supply, so its actions can influence market sentiment. The firm tracks a metric called mNAV, which compares Strategy’s market value to the value of its Bitcoin holdings. When mNAV is safely above 1, it signals the company has additional asset value beyond its Bitcoin reserve. If it falls below 1, it implies Strategy’s equity is worth less than its BTC holdings.
CEO Phong Le discussed the risk on the “What Bitcoin Did” podcast, saying, “My hope is our mNAV does not go below one.” He later added, “If we did and we did not have other access to capital, we would sell Bitcoin,” stressing it would be “a last resort.”
Combined with fading ETF inflows, weaker economic signals, and increasing geopolitical uncertainty, Bitcoin’s recent bounce appears fragile. Without a rebound in confidence, analysts warn that another drop below ninety thousand remains highly possible.
What To Expect From BTC Following The Rate Cut
So, why is Bitcoin dropping? The answer is clearly multifaceted. In the short term, the price appears to be reacting to Federal Reserve rate decisions and surrounding rhetoric. The medium-term pressure seems tied to weakening macroeconomic indicators, concerns around Strategy’s enormous BTC holdings, and the performance of top technology stocks. Although BTC is now in bear-market territory, there is still long-term optimism, but for now, it appears that the bears are firmly in control of the price action.
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