Bitcoin’s recent price drop below $90,000 has raised concerns in the market as it continues to struggle with momentum and key support levels. The flagship cryptocurrency is now testing its $87,041 support level, and failure to hold this could trigger a deeper decline toward $85,000, compounding the market downturn.

Weak Momentum Fuels Bitcoin’s Struggles

Bitcoin’s price has been falling after it broke through critical support zones. Despite attempts to maintain a positive trend, the failure to stay above the $90,000 mark signals weakening bullish momentum. The primary factor behind this decline is a shift in sentiment from short-term holders (STHs), who typically play a significant role in Bitcoin’s price movement.

Short-term holders have been struggling with the STH Spent Output Profit Ratio (SOPR) indicator, which measures the profitability of short-term holders. The SOPR shows whether holders are making profits on their transactions. When the indicator is above 1.0, it signals that these holders are making gains and are likely to hold onto their assets. However, the current SOPR has failed to maintain the 1.0 threshold, indicating that a growing number of short-term holders are now facing losses and may be motivated to sell.

Sell Pressure from Short-Term Holders

The inability of the SOPR indicator to stay above the key threshold suggests that short-term holders are under increasing pressure. These holders are known for their quick trading patterns, and their potential sell-offs could exacerbate the downward pressure on Bitcoin’s price. As more STHs begin to sell, Bitcoin may continue its downward trajectory, further eroding investor confidence in the market.

Despite Bitcoin’s price drop, exchange netflows have remained relatively stable, with only minor outflows recorded over the past 24 hours. Approximately 157 BTC worth $14 million has left exchanges, signaling that short-term holders may not be rushing to sell. This could imply that many investors are holding out for a potential reversal, hoping that market conditions will improve before they decide to sell their positions.

Bitcoin’s Price and Potential Support Levels

At present, Bitcoin is hovering just above the $88,000 mark, its lowest price since November 2024, following an almost 8% drop in the past 24 hours. The failure to hold key downtrend line support after this fall is raising concerns about a potential deeper price correction. Bitcoin is now eyeing its next major support level at $87,041. If this level holds, Bitcoin could stage a rebound and target higher resistance levels at $89,800, and eventually $92,005, signaling a possible recovery.

However, if Bitcoin breaks below the $87,041 support, the situation could worsen. A drop to the $85,000 level would invalidate any short-term bullish recovery and likely trigger further sell-offs, intensifying the downtrend.

Market Outlook and Investor Sentiment

While Bitcoin has experienced a substantial drop, it is important to note that investor sentiment is a critical factor in determining the next market moves. The current lack of large-scale sell-offs on exchanges suggests that many traders are hesitant to panic sell despite the recent decline. If Bitcoin’s support levels hold, it could potentially recover. However, if more short-term holders opt to liquidate their positions, Bitcoin could experience additional downward pressure.

Ultimately, Bitcoin’s price trajectory hinges on the support at $87,041 and the behavior of short-term holders. As market conditions evolve, investors must remain vigilant, watching for any shifts in sentiment that could signal either a recovery or further declines.