Bitcoin briefly fell below $83,000 late Monday as low liquidity, weekend macroeconomic fear in Japan and growing fears over a possible change in MSCI methodology converged into a rapid and disorderly decline.
Prices surpassed $85,000 during Asian hours on Tuesday morning, along with XRP and ether. Cardano’s ADA, Solana’s SOL and BNB Chain’s BNB show losses of up to 2%.
Market participants said the decline had little to do with usual macroeconomic triggers and much more to do with the market’s inability to absorb even modest stress in the current environment.
“Bitcoin’s fall below $90,000 is the result of a collision between the fragile market structure and the weak liquidity conditions seen over the weekend,” said Farzam Ehsani, CEO of crypto exchange VALR.
“Pressure on the markets intensified because the order book was shallow and the market lacked sufficient depth to withstand another macroeconomic liquidity shock,” he added.
Some traders are increasingly focusing on a separate structural issue: MSCI’s looming decision on whether to exclude companies with balance sheets heavily concentrated in cryptocurrencies from its global indexes.
The proposal affects companies collectively holding more than $137 billion in digital assets – including Strategy, Marathon, Riot, Metaplanet and American Bitcoin – which represents around 5% of all bitcoin in existence.
Ehsani said the market was already trying to assess the possibility of forced flows of index funds, if any of these companies were reclassified.
“Any rule change automatically triggers a review of their holdings, which could lead to forced sales of these companies’ shares and trigger large capital flows,” Ehasani said. Investors, he added, are now bracing for “short-term imbalances associated with forced capital flows.”
The poor start to December also capped a weak November for bitcoin, which ended down 17.5%, one of its biggest monthly declines in three years.
A sustained break below around $80,500 would open the door for a deeper move towards the $64,000 technical target being watched by some traders.
“If the market continues to decline, Bitcoin could test the $60,000-$65,000 range. At these levels, major institutional players, including potential Strategy competitors, may be interested in purchasing large volumes of Bitcoin,” Ehsani added.
Outside of bitcoin, U.S.-listed crypto ETFs continued to see selective inflows. Solana funds have now recorded five consecutive weeks of net purchases, adding more than $600 million since the end of October. Spot XRP ETFs also surpassed $666 million in cumulative inflows.
On-chain data from CryptoQuant and Glassnode suggests that leverage has depleted from the system, mitigating some structural risks, but not enough to offset current macro and index uncertainty.
