Bitcoin's surge to $126,000 was one of the most aggressive rallies of the year but the excitement didn't last. Within just 45 days, BTC plummeted to $87,000, wiping out billions in leverage, triggering panic, and reminding traders that even in a strong bull cycle, volatility hits hard. Here's a clear look at what caused this rapid decline.
1. Extreme Market Heat Reached a Breaking Point
Momentum had been red hot for weeks. Funding rates were elevated, leverage stacked up across exchanges, and traders were overwhelmingly positioned long. This fragile setup meant that once selling began, a wave of long liquidations kicked in accelerating Bitcoin's fall.
2. ETF Demand Cooled Off Significantly
Spot Bitcoin ETFs played a huge role in pushing BTC above $100K. But as BTC neared $120K, inflows slowed, and outflows started to appear. Less institutional buying and increased profit taking from earlier entrants weakened the market's ability to absorb sell pressure.
3. Macro Conditions Turned Risk-Off
A series of broader economic shifts added stress:
Inflation remained stubborn
Rate-cut expectations were pushed back
Treasury yields climbed
The dollar strengthened
These shifts reduced appetite for high-risk assets like crypto, contributing to the correction.
4. Miners Increased Selling Amid Revenue Pressure
Post-halving revenue challenges and rising operational expenses pushed miners to sell more of their BTC holdings especially as the price approached record highs. This added additional supply during a sensitive phase of the market.
5. Whale Profit-Taking Triggered Distribution
On-chain indicators showed major holders selling into strength between $118K and $126K. This strategic unloading at the top resulted in weaker market structure, leaving retail traders unable to absorb the heavy supply once momentum flipped.
6. Technical Breakdown Accelerated Losses
When Bitcoin lost support at key levels like $110K and later $100K, stop-losses and liquidation clusters triggered a fast cascade lower. Momentum shifted sharply bearish, pushing the price down to the next significant demand region around $87K.
Outlook: What Comes Next?
Even with the steep drop, Bitcoin is still trading within a broader bull-market pattern. Historically, 20-35% retracements are common in every major BTC cycle. Many analysts see this correction as a necessary reset that clears excessive leverage and sets the stage for future upside.
Holding the $85K-$90K support zone will be crucial for Bitcoin's n$BTC ext recovery wave.$BTC
