Behind the BTC dropping below 89,000: Institutions are still increasing their positions, so why is the market panicking?

According to the latest news, BTC broke below the 89,000 USDT level on January 22 and is now quoted at 88,989.5 USDT. Behind this seemingly simple price breakout, there is a complex game of three forces in the market: institutions, retail investors, and the macro environment. In the short term, there is significant pressure, but the long-term signals are somewhat contradictory.

Short-term pressure definitely exists

From the price trend, BTC’s decline has already formed a certain rhythm. According to data, BTC has fallen 7.46% over the past 7 days, and 1.42% in the past 24 hours. Although there is still a 2.19% increase over 30 days, the recent downward trend is clear.

More notably, changes in market structure are worth paying attention to. Galaxy research director pointed out that the ETH/BTC daily chart has formed a complete death cross — the 50-day moving average crossing below the 200-day moving average, which is a classic bearish signal. Data shows ETH has fallen 6.46% to $3,104, a decline exceeding BTC’s 3.12%, indicating that Ethereum and altcoins are underperforming relative to Bitcoin. This divergence went largely unnoticed during the market optimism early 2026, until now when it has become widely recognized.

Fund flow reveals contradictory signals

The most interesting aspect is the divergence in fund flows:

Institutional accumulation

• Over the past year, US custodial wallets have net added approximately 577,000 BTC, worth about $53 billion
• Strategy added 22,305 BTC last week at an average price of $95,284
• Coinbase Institutional transferred 1,320 BTC (about $12.2 million) to unknown wallets in the past two days

ETF outflows clearly evident

• On January 20, the US spot Bitcoin ETF recorded a net outflow of $395 million, ending four consecutive days of inflows
• Fidelity’s FBTC had a net outflow of $205 million, while BlackRock’s IBIT saw a $15 million inflow

What is the reason behind this? According to the latest news, geopolitical uncertainty is the main trigger — former President Trump issued tariff threats against NATO allies, and the EU may retaliate, putting risk assets under pressure.

Whales are also under pressure

Interestingly, even whales are losing out. Arkham data shows that Hyperunit whales have given up all gains within 24 hours. Their holdings of over $800 million worth of ETH, SOL, and BTC lost over $55 million in the past day, returning to early-year levels. This indicates that even large funds are not immune to this decline.

What to watch next

Analysts’ warnings are worth noting: ongoing macro pressures could push BTC to between $67,000 and $74,000. However, the continuous accumulation by institutions suggests they are looking at longer-term opportunities.

In the short term, BTC is testing support levels. The market may rebound in the $92,000–$92,500 range, but macro uncertainty remains a looming threat. In the long run, the persistent buying by institutions indicates their confidence in BTC remains intact, and they are using short-term volatility to position themselves.

Summary

The superficial reason for BTC falling below 89,000 is clear — geopolitical tensions leading to risk asset sell-offs. But the deeper logic lies in market structural divergence: institutions are increasing their holdings, ETFs are flowing out, altcoins are underperforming relative to BTC, and macro uncertainty is rising. This is not simply a bull-bear switch but a re-pricing of risk by market participants. While short-term pressure is real, the steadfast accumulation by institutions reminds us that this could be an opportunity for long-term investors. The key is whether the macro environment can stabilize.