"USD trend reversal" triggers a chain reaction risk in the crypto market, with Bitcoin recently plunging rapidly to $89,000.

The latest trend of the US dollar is rewriting the short-term landscape of the cryptocurrency market. Bitcoin has repeatedly lost key psychological levels over the past few days, falling from above $95,000 down to around $89,890 ($89.89K). Market observers point out that this decline not only reflects technical vulnerabilities but also exposes fundamental contradictions within the market structure. As of the latest data (January 22, 2026), Bitcoin has seen a slight 0.49% increase over the past 24 hours, but the strength and breadth of this rebound still fail to dispel market concerns about a trend reversal in the dollar.

$860 Million Liquidation Interpretation: The Inevitable Result of Bullish Mass Trampling

According to data from derivatives platform CoinGlass, during the Bitcoin price retracement from the $95,000–$97,000 range, over $860 million in forced liquidations occurred in the past 24 hours, with $780 million coming from long positions.

The implications behind these figures are worth deep reflection: the previous rebound’s bullish bets were clearly overly concentrated in the derivatives market. When signs of a reversal appeared, a chain reaction immediately triggered a “bull trap” phenomenon. In other words, this wave of liquidations is not the result of fundamental market changes but an inevitable outcome of leverage imbalance. Meanwhile, gold prices continued to hit new highs at $4,600 per ounce (up 1.7%), as risk-averse funds flowed into traditional assets amid the U.S. announcement of a 10% tariff increase on Denmark and other European countries, further diverting incremental capital away from the crypto market.

Deep Contradictions Revealed by Weak Liquidity

The latest report from on-chain analysis firm Glassnode reveals a key issue: the previous attack on $96,000 by Bitcoin was fundamentally driven by “mechanical” capital flows in the derivatives market, rather than sustained buying in the spot market. More specifically, this rally mainly relied on forced liquidations triggered by short squeezes. Once this technical demand diminishes, a reversal in price becomes an unavoidable fate.

Glassnode further points out that futures market liquidity is relatively thin, and any decline in forced buying pressure could trigger a sharp reversal. At the same time, the “supply clusters” accumulated by long-term holders near cycle highs have repeatedly doused recent rebounds. The existence of this pressure zone suggests that upward breakthroughs will face ongoing selling pressure.

Spot Demand Is the True Support for the Dollar Price Trend

Another authoritative analysis firm, CryptoQuant, adopts a more cautious stance, suggesting that the recent trend since late November resembles a “bear market rebound” rather than the start of a new bullish cycle. They emphasize that Bitcoin is still below its 365-day moving average (around $101,000), which has traditionally been regarded as a key “bull-bear dividing line.”

What’s more concerning is that, despite some signs of demand improvement, the overall market structure has not undergone substantive change. Capital inflows into the US Bitcoin spot ETF remain weak, and spot market demand continues to shrink. This indicates that the strengthening of the dollar trend could continue to exert pressure on crypto assets.

Early Bottom Signals but Risks Still Unresolved

However, the market is not without bright spots. Glassnode observes that compared to the sell-off at the end of 2025, the pace of long-term holder capitulation has significantly slowed, implying a stabilization of holder confidence. Meanwhile, spot funds on major exchanges like Binance have shifted from selling to buying, and Coinbase’s selling pressure is easing. These signs suggest that the market is building a bottom.

Options markets also reflect cautious sentiment among participants. Although implied volatility remains relatively low, long-dated contracts still contain downside protection strategies, indicating that investors remain vigilant against downward risks.

Two leading analysis firms agree: before spot demand resumes, Bitcoin will remain highly sensitive to changes in leverage and liquidity. The future development of the dollar trend will be a crucial factor in determining the short-term direction of the crypto market. Investors must continuously monitor real demand signals in the spot market and remain alert to the potential amplification effects of leverage risks.