Bitcoin Plunges After China Mining Curbs and US Regulatory Delay Trigger $140B Crypto Sell-off
Cryptocurrency markets plunged as total market capitalization fell roughly $140 billion, dipping below $3 trillion. Bitcoin lost its $90,000 support, sliding from about $90,357 to a low near $85,200 and trading under $86,000 in Asian hours. Traders pointed to two principal drivers: renewed Chinese mining restrictions that forced some miners offline and record-high leverage in derivatives markets. Deribit data showed heavy option open interest concentrated at the $85,000 Bitcoin strike (around $2 billion OI), amplifying downside via short hedging and cascading liquidations. On-chain metrics signalled elevated stress — falling hash rates, roughly $100 billion in unrealized losses, and many ETF inflows (about 60%) underwater with some funds trading below NAV. Adding to market unease, the US Senate Banking Committee delayed a market-structure bill that could clarify CFTC oversight of spot markets until early 2026, reducing ETF investor risk appetite. The sell-off rippled through major altcoins, with Ethereum and Solana among tokens suffering double-digit drops. Short-term implications: higher volatility, concentrated liquidation risk around key strikes (notably $85k), and potential further downside if legislative clarity and miner pressure persist. Traders should expect elevated liquidation risk and defensive positioning from institutions and retail; monitor derivatives OI, ETF flows/NAV, and hash rate recovery for signs of stabilization. Disclaimer: not investment advice.
Bearish
The combined news is bearish for Bitcoin. Immediate drivers—Chinese mining curbs that reduced hash rate and forced some miners offline, plus concentrated derivatives exposure at the $85,000 strike—created mechanical selling via miner sales, short hedging and cascading liquidations. Elevated unrealized losses, ETF inflows trading underwater and delayed US regulatory clarity further dent investor appetite. Historically, concentrated option strikes and high open interest amplify downside during stress windows, raising short-term volatility and increasing likelihood of further drawdowns until leverage is reduced and on-chain metrics (hash rate, miner selling) and ETF flows show recovery. Longer-term impacts depend on whether regulatory delays persist and if mining capacity stabilizes; if clarity returns and hash rates recover, the bearish pressure could abate, but in the near term traders should expect heightened liquidation risk and defensive positioning.