Bitcoin falls below 87,000, what does the awakening of dormant wallets mean?

Bitcoin is currently in a sustained downtrend cycle since reaching its all-time high in October. From the peak of $126,080 to the present, BTC has fallen approximately 31%, with the latest price fluctuating around $87,830. This correction is accompanied by clear signals from shifts in market sentiment and anomalies in on-chain data.

Rate Expectation Reversal Triggers Chain Reactions

The rapid cooling of the Fed’s December rate cut expectations is the main trigger for the current market decline. According to the CME FedWatch tool, the probability of a 25 basis point rate cut in December has dropped to 37.6%, while the market now expects a hold on interest rates with a probability exceeding 62%. Data from the predictive market Polymarket also reflects this shift—63% of market participants now anticipate no rate change in December, a sentiment change that began Tuesday evening.

Although the delayed September employment data showed an increase of 119,000 jobs, beating expectations, the data itself presents complex contradictions: 470,000 new entrants to the labor force, but an increase of 219,000 in unemployment. This mixed signal has not provided clear policy guidance for the market and has instead deepened uncertainty about the Fed’s stance.

Liquidation Data Confirms Market Selling Intensity

The severity of this decline is confirmed in the derivatives market. According to CoinGlass data, the total crypto market liquidation in the past 24 hours reached $933 million, with Bitcoin liquidations around $380 million and Ethereum about $239 million. Ethereum and XRP experienced single-day declines of 3%, with ETH dropping 15% over the week and XRP nearly 18% over the week.

Current data shows BTC at $87,830, ETH at $2,950, and XRP at $1.86.

What Does the Awakening of Dormant Wallets Mean?

Analysis from market maker FlowDesk indicates that the underlying reason for the ongoing market pressure is that large Bitcoin wallets that have not moved in years are now transferring assets en masse to centralized exchanges. What does this imply? It is generally interpreted as long-term holders (often early profit-takers) cashing out.

These potential sell pressures completely absorb existing buy orders, making spot trading clearly favor sellers. Fund managers are adjusting their positions before year-end, shifting from aggressive to defensive holdings, focusing on reducing exposure and protecting realized gains. This psychological shift directly leads to liquidity drying up at key technical support levels.

Options Market Repricing Risks

Deribit options data clearly reflect a sharp change in trader sentiment. Previously, the most active $140,000 call options have been replaced by $85,000 put options, which are now the largest open interest strike in the BTC options market. This indicates traders are reallocating defensive tools in preparation for larger downside moves.

Myriad also shows that market sentiment indicators are shifting similarly— the probability of BTC reaching $85,000 has risen to 80%, far above the 22% chance of reaching $115,000. In other words, bearish confidence has increased by 34% over the past week, while BTC has fallen about 12%, leaving only 2.4% to reach the $85,000 support level.

If the bullish camp’s prediction of a move back to $115,000 is correct, the profit potential exceeds 4 times; but if spot holders expect this move, their potential gains are only about 31%. This asymmetry reflects a market re-evaluation of risk.

Technical Outlook Confirms Oversold Conditions but Lacks Support

On the technical side, Bitcoin’s 14-day RSI has entered oversold territory. However, this does not mean a short-term rebound is imminent—what matters is the lack of clear technical support below $87,000. The next line of defense is the 78.6% Fibonacci retracement level (around $73,000+). If this level is broken, the $74,000 area near the yearly low will become the new support.

Within the current downtrend channel, traders tend to sell on rebounds. Even if Bitcoin breaks out of this channel, the market will need to observe whether an upward low structure forms before bulls start actively building positions.

Key Variables Moving Forward

The current market consensus is betting on “no rate cut in December.” However, if the Fed unexpectedly cuts rates, it could trigger a short-term rebound in Bitcoin and completely reset the probability structure of the forecast market—precisely what Myriad implies about the market’s pricing of future uncertainty.