In-depth analysis of the BTC $90,000 waterfall phenomenon

Nakamoto 2026-1-4 11:03 87145人围观 BTC

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The "waterfall" phenomenon (that is, a cliff-like decline in a very short period of time) that Bitcoin (BTC) exhibited at the $90,000 mark is a typical feature of the cryptocurrency market entering a period of high volatility. This phenomenon is not only a simple withdrawal of funds, but also the result of the violent collision between leverage risk, psychological threshold and macro fundamentals.

Here’s an in-depth look at this phenomenon:

1. Structural incentives: The Liquidation Cascade

“The core driving force of the "waterfall" phenomenon usually comes from the serial liquidation of multiple orders.

* High leverage accumulation: When BTC broke through or approached $90,000, a large number of retail investors and institutions used leverage to chase the rise, and the market accumulated huge "long positions."

* Triggering the "stop-loss minefield": There are usually a large number of stop-loss orders lurking below $90,000. Once the price falls below a key price level (such as $89,500) due to small fluctuations, the first stop loss orders will be triggered.

* Automatic Selling Pressure: A stop-loss order converts into a sell-to-market order, pushing the price further down and triggering a liquidation level at a lower price. In the "waterfalls" that occurred many times in the second half of 2025, the single-day liquidation scale reached the level of 1 billion to 2 billion US dollars many times, forming a negative feedback loop of "continuous decline".

2. Fundamental turning: the ebb of the “Trump deal” and policy anxiety

Entering the end of 2025, the market logic has undergone substantial changes:

* All the good news: The expectations for “encryption-friendly policies” triggered by Trump’s victory at the end of 2024 have basically been priced in by the market. When actual policy implementation falls short of expectations or faces resistance, funds begin to take profits.

* Macro risk aversion: The escalation of Sino-US tariff frictions and fluctuations in US Treasury yields in the second half of 2025 have prompted institutional investors to enter "Risk-off" (risk aversion) mode and withdraw liquidity from risky assets such as Bitcoin.

* Signal of institutional holding reduction: Changes in financial forecasts of major holders such as MicroStrategy, as well as the shrinkage of related companies such as American Bitcoin Corp, have dealt a heavy blow to market confidence.

3. Psychological Game: The $90,000 “Ceiling” Effect

In trading psychology, $90,000 is not only a price, but also a defensive stronghold.

* Anchoring effect of integer levels: Traders tend to place orders at integer levels. Above $90,000 is an intensive profit-taking selling area, while below is a fragile support level.

* Doubts about bull-bear conversion: Bitcoin fell back to 90,000 after failing to hit 120,000 in 2025, making many investors suspect that the market has entered the "Hangover Phase". Whenever the price hits this point, panic can easily be amplified, leading to "front-running selling."

4. The amplification effect of the platform mechanism

The mechanics of modern crypto exchanges can at some point exacerbate the waterfall effect:

* ADL (automatic position reduction mechanism): Under extreme fluctuations, the automatic position reduction mechanism of some decentralized or centralized contract platforms (such as Hyperliquid) will be activated, forcing losses to be shared equally in order to protect the trading system. This often causes price deviations when liquidity is scarce, resulting in a more violent "pin insertion" phenomenon.

* Algorithmic trading resonance: Most quantitative robots on the market are set up with similar trigger logic. When a technical indicator (such as falling below the 20-day moving average) is triggered, tens of thousands of robots will execute sell orders at the same time.

Summary and Outlook

“The waterfall phenomenon is essentially a “stress test” of the market. It removes excessive leverage from the market and redistributes the cost of holding positions.

Taking advantage of the "waterfall phenomenon" near $90,000 for short-term trading is essentially capturing liquidity opportunities under extremely irrational emotions. In this high-volatility environment, short-term traders are not "predicting prices" but "capturing deviations."

The following is an in-depth short-term practical strategy for the specific fluctuation characteristics of BTC:

1. Tool preparation: Insight into the depth of the “waterfall”

At the $90,000 mark, traditional K-line indicators (such as MACD, MA) often lag. You need to pay attention to the following real-time data:

* Liquidation Heatmap: Use tools such as CoinGlass to view multiple liquidation clusters in the $85,000-$88,000 range. Waterfalls often "hunt" these highlighted areas with precision.

* Funding Rate: If the funding rate turns from extremely high to negative when the waterfall occurs, it means that the long leverage has been cleared and the opportunity for a rebound is coming.

* 1 minute/5 minute trading volume: The end of the waterfall is usually marked by "huge volume pins" - that is, a huge amount is released in a short period of time, and then the price rebounds quickly.

2. Core trading strategies

A. “Mean Reversion” strategy

This is the most common waterfall profit method. When BTC crashes from the 90,000 mark, look for oversold rebound opportunities.

* Entry point: Focus on the bottom where the liquidation clusters are densest. For example, the heat map shows that there is a heavy position at $87,500, and the entry level should be set at around $87,000 to take advantage of the excessive selling caused by the liquidation.

* Technical indicators: In conjunction with RSI falling below 20 or the price touching the outside of the lower Bollinger Bands.

* Operation: The take-profit position is set at 0.382 or 0.5 Fibonacci retracement level of the decline (usually there will be a quick recovery after the waterfall).

B. “The Wall Fade” strategy

Taking advantage of the $90,000 “psychological wall” for high-frequency shorting.

* Logic: As long as the price touches $90,000-$90,500 and the selling pressure above is extremely heavy and fails to break through quickly, you can try to short the position.

* Stop Loss: Must be set above $91,400 (current key resistance breakout level).

* Gains: Targeting range support at $88,500-$87,000.

C. “Breakout Scalping” strategy

If the 90,000 mark is swallowed up by a huge amount, the waterfall phenomenon will be transformed into a "rocket phenomenon."

* Signal: When BTC stands firm at $91,500 and cannot be broken back, the waterfall logic fails. At this time, the short-term trend turns long, and the target is $94,000 or even higher.

3. Risk control: the “parachute” of waterfall trading”

Under such extreme market conditions at the end of 2025, short-term trading without risk control is equivalent to gambling:

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