Why Is Crypto Dumping? Understanding Market Psychology Behind The Selloff

The Current Shift: From Leverage to Conviction Loss

When we look at recent market movements, the crypto market is showing signs of weakness compared to traditional markets like gold and stocks. The significant downturn we witnessed recently has reshaped market sentiment in a meaningful way. What’s interesting is how the nature of selling pressure has evolved. During the October drop, the decline was predominantly driven by liquidations in leveraged positions—spot traders largely remained untouched because most were offline during the crash. By the time they woke up to recover prices, their holdings had already stabilized.

The current situation tells a different story. Today’s pressure stems from spot holders themselves reconsidering their positions, doubting whether the market will break higher or retreat to former support levels. This represents a fundamental shift in market psychology.

Understanding Support Levels: Why $98,000 Matters

To answer why crypto is dumping, we need to examine the structural foundation of Bitcoin’s price action. On the weekly timeframe, a critical support level sits at $98,000. As of now, Bitcoin has not recorded a weekly close below this level—and that’s significant. While $107,000 isn’t necessarily a major resistance zone, maintaining above it on weekly closes has prevented deeper structural damage.

The weekly chart tells a bullish narrative as long as this $98,000 support remains intact. Even if Bitcoin temporarily touches this zone or experiences pullbacks toward $100,000, the broader weekly structure preserves its constructive bias. Altcoins will likely continue showing weakness until Bitcoin demonstrates renewed strength.

Daily Timeframe: Where The Real Bearish Pressure Lives

The daily chart presents a contrasting picture. Bitcoin remains in a bearish structure as long as it fails to close above $116,000. This level represents the boundary between two different market regimes. The recent push toward $116k resulted in clear rejection, followed by an attempt to reclaim $112,000—which also failed.

This double failure signals that daily momentum remains challenged. Why is crypto dumping on shorter timeframes? Because the daily structure has not yet flipped positive. The $112,000 level is now the next crucial zone to monitor. If Bitcoin cannot reclaim and hold this level, the daily bearish pattern will persist.

The Time Frame Divergence: Trading Different Realities

This creates an interesting paradox: the weekly chart suggests staying patient and looking higher, while the daily chart warns of continued choppiness and downside risk. Market consolidation will likely continue until the daily structure aligns with weekly direction. The best strategy during this disagreement between timeframes is to remain above $98,000 and wait for clarity.

Action Plan For This Environment

Given the mixed signals, defensive positioning makes sense. The market could test the $98,000–$100,000 zone without necessarily breaking the bullish case. However, until the daily chart shows meaningful signs of recovery toward $116k and beyond, short-term volatility should be expected. If you’re positioned bullishly, patience is the virtue here—let the market structure resolve itself rather than forcing entries during confusion. Avoid over-leveraging unless you have exceptional conviction about direction and proper risk management in place.