Why did Bitcoin drop today? $500 million evaporated daily, 6.5 million coins in loss

On December 9, Bitcoin edged down slightly to around $90,550. Investors are losing nearly $500 million daily, with almost 6.5 million BTC currently in an unrealized loss state. Leverage in the futures market has dropped sharply, a scenario reminiscent of the later stages of previous market contractions. However, the Federal Reserve has ended $2.4 trillion in quantitative tightening and is turning toward reserve rebuilding, M2 money supply has reached $22.3 trillion, and large wallets have accumulated 45,000 BTC over the past week.

On-chain Data Reveals the Truth: $500 Million Evaporates Daily

(Source: Glassnode)

The first answer to why Bitcoin fell today lies in on-chain data. According to Glassnode tracking, realized loss levels indicate investors are losing nearly $500 million daily, a figure that far exceeds the pressure reflected by surface-level price fluctuations. Realized losses are losses confirmed when investors actually sell, as opposed to unrealized (paper) losses—they represent real capital outflows and a collapse in market confidence.

Nearly 6.5 million BTC are currently in an unrealized loss state, meaning about one-third of circulating supply is underwater. Holders of these positions bought at average prices higher than the current market price and are under ongoing psychological pressure. Historical data shows that when the number of BTC in unrealized loss reaches this scale, the market is often at a key turning point in its cycle—either forming a bottom and rebounding, or collapsing further and triggering panic selling.

The sharp decline in futures market leverage further confirms market stress. Leverage decreases usually have two causes: active deleveraging (investors consciously reducing risk exposure) or passive liquidation (forced closure due to price swings). Given the current market, both factors are at play. Funding rates have moved from positive to near-neutral, indicating a large closure of long-leveraged positions. Although this cleansing process is painful, it is often a necessary step for a healthier market.

Short-term holders continue to sell tokens as prices fall; these investors who bought BTC within the past 155 days are often the most vulnerable cohort in the market. Their selling creates sustained sell pressure, keeping Bitcoin prices near $90,000. From a behavioral finance perspective, short-term holders tend to exit at precisely the wrong moment, and this irrational behavior creates buying opportunities for long-term investors.

The Double-Edged Sword of a Fed Policy Pivot

(Source: Bloomberg)

The macro backdrop for why Bitcoin fell today is closely tied to the Fed’s policy pivot. According to the Financial Times, quantitative tightening officially ended on December 1, marking the conclusion of the Fed’s $2.4 trillion balance sheet reduction. Bank reserves have fallen to historically tight levels, and the Secured Overnight Financing Rate (SOFR) has periodically tested the policy corridor’s upper bound.

This shift in liquidity presents a double-edged sword for Bitcoin. In the short term, tighter liquidity pressures risk assets, and Bitcoin, as a high-beta asset, is hit first. But in the medium to long term, the Fed’s upcoming Reserve Management Purchase (RMP) program, possibly starting January 2026, will inject about $35 billion per month into Treasury purchases, reinvesting mortgage-backed securities funds into short-term assets.

According to Evercore ISI estimates, this operation will cause annual balance sheet growth of over $400 billion. This shift would mark the first sustained expansion since quantitative tightening began. Historically, Bitcoin tracks these liquidity cycles much more closely than policy rate changes. After the Fed launched unlimited QE in March 2020, Bitcoin soared from $3,800 to $69,000—a direct result of rampant liquidity.

Meanwhile, broader monetary aggregates suggest the liquidity cycle may already be turning. M2 money supply has reached a record $22.3 trillion, surpassing its early 2022 peak after a long contraction. This figure is critical because M2 includes cash, checking, and savings deposits—a vital indicator of real liquidity in the economy. When M2 growth accelerates, excess liquidity tends to seek high-return assets, and Bitcoin is a top destination for such capital.

However, the market is currently in a gray area of policy transition. Labor market data shows nonfarm payrolls declined in five of the past seven months, and slowing job openings, hiring rates, and voluntary quits have shifted employment from resilient to fragile. This weak labor data supports a Fed pivot toward easing on one hand but raises recession fears on the other, which could suppress risk asset demand.

Contradictory Signals from Miner Capitulation and Whale Accumulation

Another key factor in today’s Bitcoin drop is miner capitulation pressure. With production costs nearing $74,000, mining profitability has sharply deteriorated. Mining difficulty has recorded its largest drop since July 2025, indicating marginal operators are scaling back or shutting down. This miner capitulation has historically marked market bottoms, as it represents the final flushing out of forced sellers.

However, these stress signals coincide with early signs of supply tightening, forming a contradictory but intriguing market structure. BRN Research told CryptoSlate that over the past week, large wallets have accumulated about 45,000 BTC. This scale of accumulation signals institutional investors are strategically allocating amid market panic. At current prices, 45,000 BTC is worth over $4 billion—beyond the reach of retail investors.

Exchange balances continue to trend downward, another clear sign of supply tightening. When BTC flows out of exchanges, it usually means holders plan to hold long-term rather than trade short-term. Bitwise’s supply indicators show that even as retail sentiment is “extremely fearful,” cryptocurrency is still accumulating across wallet user groups. Crypto is shifting from highly liquid trading venues to long-term custody, reducing the supply available to absorb further sell-offs.

Stablecoin inflow data also supports this view. Large amounts of stablecoins are flowing into exchanges but have not yet converted to Bitcoin, indicating capital is waiting on the sidelines, ready to re-enter the market once conditions improve. This “ample ammunition” status often appears just before market reversals; when prices hit a key support or a catalyst arrives, this sidelined capital could quickly drive a rebound.

Bitwise adds: “Capital inflows to Bitcoin continue to shrink, with 30-day realized market cap growth slowing to just +0.75% per month. This suggests profit-taking and loss-taking are roughly balanced now, with losses only slightly exceeding gains. This rough equilibrium means the market has entered a calm phase, with neither side dominant.” Such balance is often the calm before major volatility; once the Fed’s policy direction is clarified, the market may quickly break the stalemate.

Key Price Ranges and Trading Strategies

From a market structure perspective, technical analysis provides a clear framework for why Bitcoin fell today. Bitcoin remains bounded by two key zones. If the price breaks above $93,500, the asset will enter a zone where momentum models are more likely to trigger, with subsequent levels at $100,000, $103,100 (short-term holder cost basis), and the long-term moving average.

Conversely, if the Fed sends cautious signals and resistance is not broken, the market may fall back to the $82,000–$75,000 range, which has repeatedly served as a structural demand reserve. This range is important because it’s near miners’ production cost ($74,000) and is a focal area for ETF basis and corporate treasury thresholds.

BRN notes that cross-asset performance also confirms this sensitivity. Ahead of the meeting, gold and Bitcoin traded in opposite directions, reflecting that market rotation is driven by changing liquidity expectations, not just risk sentiment. When investors expect tighter liquidity, capital flows to traditional safe-haven assets like gold; when expecting looser liquidity, it shifts to high-growth assets like Bitcoin.

If Powell’s comments reinforce the view that reserve rebuilding is the next phase of the policy cycle, capital flows could quickly pivot to assets that respond positively to liquidity expansion. For traders, the key is to closely watch the Fed’s December meeting language, especially regarding the timing and scale of the RMP.