The market just endured a macro-driven tremor. Bitcoin violently shook below $80,000 over the weekend, catalyzed by the formal confirmation of Kevin Warsh as the next Federal Reserve Chair. The resulting deleveraging cascade triggered a massive $825 Million in liquidations. However, the drop halted near a critical technical zone that analysts are now calling a potential Bitcoin mid-cycle support floor—a level that could define the next phase of the market.
The Liquidation Cascade and the Hunt for Support
The sell-off was broad and brutal. According to QCP Asia, the Warsh nomination prompted a market-wide reassessment, with expectations shifting toward tighter monetary policy. This sparked risk-off flows across equities and even safe havens like gold. For crypto, higher margin requirements accelerated the unwind of leveraged bets, creating a fierce feedback loop of selling.
Yet, Bitcoin found a footing. It stabilized above a key area that corresponds to cycle lows seen earlier in the year. Analyst PlanC characterizes this as a capitulation-style low, similar to past major bottoms (2018, March 2020, FTX), rather than the start of a new prolonged bear market. The key question is whether this support will hold.
Is This the Bitcoin Mid-Cycle Support Floor?
The current zone represents a crucial inflection point. Options market data shows that while put buying persists for protection, the aggressive hedging seen in November has moderated—suggesting the most urgent fear has been purged. However, QCP Asia warns momentum remains weak and the market is vulnerable to further liquidation-driven moves if this support breaks.
All eyes are now on two factors for a stabilization: institutional accumulation near MicroStrategy’s cost basis (~$76K), and the tone of early communications from Fed Chair-designate Warsh. Any signal tempering hawkish expectations could serve as a catalyst for relief.
My Thoughts
This is the high-volatility environment where cycles are made. The Bitcoin mid-cycle support holding is the bullish scenario. It would suggest the bull market structure is intact and this was a necessary, Fed-induced flush of excess leverage. A break below, however, opens the door to a deeper retracement. My leaning is that this support will indeed act as a springboard. The scale of liquidations indicates a clearing event, and the narrative of a pro-crypto Fed Chair in Warsh is a long-term positive being overlooked in the short-term panic. This is a zone for strategic accumulation, not fear.