Bitcoin and the wider cryptocurrency market are experiencing a pronounced mid-week selloff on January 7, 2026, with the world’s largest digital asset sliding back toward the psychologically critical $90,000 level. The pullback erases gains from the first week of the new year and raises fresh questions about whether the bullish momentum that characterized late 2025 can be sustained into the first quarter.
TL;DR
- Bitcoin falls 3% in 24 hours to trade near $91,100, extending overnight losses
- CoinDesk 20 Index drops nearly 4%, with XRP leading declines at minus 8%
- Ether slips 3.6% despite Morgan Stanley’s move to offer spot ETH ETF access
- Total crypto market capitalization declines 0.8% to $3.27 trillion
- Bernstein analysts maintain that markets have bottomed, calling the dip a buying opportunity
Bitcoin’s Sharp Mid-Week Decline
After opening the first full trading week of 2026 on a positive note — Bitcoin traded as high as $93,700 on January 6 — the flagship cryptocurrency has reversed course sharply. As of late afternoon U.S. trading on January 7, Bitcoin is changing hands at approximately $91,100, representing a 3% decline over the past 24 hours. The move lower extends what began as an overnight retreat during Asian trading hours and has accelerated through the European and American sessions.
The decline has triggered significant liquidations across leveraged positions. Data from major derivatives exchanges shows that more than $460 million in leveraged positions have been wiped out in the latest pullback, with long positions bearing the brunt of the damage. The cascading liquidations have added downward pressure, creating a feedback loop that has pushed Bitcoin perilously close to the $90,000 support level that analysts have been watching as a critical technical threshold.
The $90,000 level carries both psychological and technical significance. It represents the lower boundary of the trading range that Bitcoin has established since late December 2025, and a decisive break below this level could open the door to a deeper correction toward the mid-$80,000 zone. Traders are closely monitoring whether buying interest will emerge at current levels or whether the selling pressure will continue to build.
Broader Market Feels the Pressure
The selloff is not confined to Bitcoin. The CoinDesk 20 Index, which tracks the performance of the top 20 cryptocurrency assets by market capitalization, is trading nearly 4% lower over the same 24-hour period. The decline is being led by XRP, which is down more than 8% after being one of the standout performers in the opening days of 2026. The sharp reversal in XRP suggests that profit-taking is intensifying following the token’s strong start to the year.
Ether, the second-largest cryptocurrency by market cap, is also under pressure, declining 3.6% on the day. Notably, the ETH price action is showing no positive reaction to the news that Wall Street giant Morgan Stanley is moving to offer spot Ethereum ETF access to its clients. The inability of such a significant institutional catalyst to buoy prices underscores the strength of the current risk-off sentiment sweeping through digital asset markets.
The total cryptocurrency market capitalization has slipped approximately 0.8% to $3.27 trillion, reflecting broad-based selling across most major tokens and sectors. Altcoins, which had been showing signs of life in the first days of January with some analysts suggesting an altcoin season could be approaching, have given back a portion of their recent gains.
Diverging Signals From Traditional Markets
One of the notable features of the current crypto selloff is its divergence from traditional equity markets. While digital assets are under pressure, the Nasdaq Composite Index is trading higher by approximately 0.5% on the same day. This decoupling suggests that the crypto-specific factors — rather than a broad-based risk-off move across all asset classes — are driving the current price action.
However, precious metals are also pulling back from recent gains, with gold down 1% and silver off 5% on the session. The simultaneous decline in both crypto and metals may indicate that some investors are reducing exposure to alternative assets more broadly, potentially in response to shifting expectations about Federal Reserve monetary policy or profit-taking following strong runs in both asset classes.
Bernstein Analysts See a Bottom
Despite the current weakness, not all market observers are bearish. Analysts at Bernstein have released a note asserting that Bitcoin and the broader crypto market have already bottomed following the fourth-quarter sell-off of 2025. The investment bank’s crypto research team points to several factors supporting their thesis, including the recovery from forced liquidations and long-term holder selling that pushed prices down as much as 35% from their October 2025 highs.
Bernstein’s analyst Gautam Chhugani has reiterated an optimistic outlook for Bitcoin in 2026, pointing to fresh new-year allocations, safe-haven demand, and the evolving regulatory landscape as tailwinds that could propel prices higher in the medium term. The firm views the current dip as a buying opportunity rather than the start of a prolonged bear market, though it acknowledges that near-term volatility is likely to persist.
Digital Asset Treasury Stocks Show Mixed Reaction
In the equities market, digital asset treasury stocks — companies that hold significant Bitcoin reserves on their balance sheets — are showing a mixed reaction to the current price environment. Strategy (formerly MicroStrategy), the largest corporate holder of Bitcoin, is an outperformer with a 1% gain following MSCI’s decision not to exclude the stock from its indices. However, the broader DAT sector is mostly lower, with Bitmine Immersion (BMNR) down 6%, Sharplink Gaming (SBET) off 2%, and XXI (XXI) lower by 5%.
The MSCI decision, announced on the evening of January 6, had initially boosted sentiment around DAT stocks. The index provider confirmed it would not exclude Strategy and other digital asset treasury firms from its indexes for now, removing a significant overhang that had weighed on the sector. However, the positive reaction has been muted by the concurrent decline in Bitcoin’s price, illustrating the tight correlation between these stocks and the underlying asset they hold.
MSTR-to-IBIT Ratio Signals Potential Bounce
On the weekly timeframe, the ratio of Strategy (MSTR) stock to the iShares Bitcoin Trust (IBIT) has bounced off the 3-level for a second consecutive week and is currently trading around 3.11. This ratio held 3 as support in March 2024 before rallying to a peak of 9.5 in November 2024, coinciding with MSTR reaching its all-time high. Bulls are watching closely to see whether the current support level holds, which could signal a renewed period of outperformance for the stock relative to spot Bitcoin exposure.
The ratio’s behavior is being closely tracked by institutional investors who use it as a gauge of market sentiment toward leveraged Bitcoin exposure versus direct spot holdings. A sustained bounce from current levels could attract fresh capital inflows into both MSTR and the broader DAT sector, potentially providing a tailwind for Bitcoin prices as well.
Why This Matters
The current pullback in Bitcoin and the broader crypto market serves as a reminder that the path to higher prices is rarely linear. While the fundamental case for digital assets remains compelling — institutional adoption is accelerating, regulatory clarity is improving, and the technology continues to mature — short-term price action can be volatile and unpredictable. The $90,000 level represents a critical test for Bitcoin bulls. If the support holds, it could set the stage for a resumption of the uptrend. A break below, however, could trigger another wave of selling and delay the next leg higher. Investors should watch for signs of accumulation at current levels, monitor the liquidation data for evidence that the forced selling is exhausting itself, and pay attention to macroeconomic catalysts — particularly any signals from the Federal Reserve — that could shift the risk appetite landscape in either direction.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Cryptocurrency investments are subject to high market risk. Always conduct your own research and consult with a qualified financial advisor before making investment decisions. Past performance is not indicative of future results.
XRP down 8% leading declines while eth only dropped 3.6%. tells you everything about where smart money is positioned right now
$460 million in liquidations in one session. someone forgot to set their stops
Bernstein calling the dip a buying opportunity is so on brand for them. they said the same thing at 60k in 2021
^ honestly bernstein has been right more often than not this cycle. hate to admit it but their calls have been solid
CoinDesk 20 dropping 4% in a day is pretty standard for a monday in crypto. this is just volatility doing its thing
morgan stanley offering spot ETH ETF access and eth still slides 3.6%. sell the news is undefeated