Bitcoin has dropped below the $100,000 threshold as the broader crypto market experiences heightened volatility.

This downturn coincides with a significant decline in transaction activity on the Bitcoin network, bringing memory pool (mempool) volume to its lowest level since March 2024.

Market Downturn Wipes Out Over $500 Million in Liquidations

Over the past 24 hours, Bitcoin fell below $100,000, shedding over 4% of its value and briefly touching $98,000. Data from BeInCrypto indicates that Bitcoin initially peaked at $102,000 before succumbing to selling pressure.

The decline follows broader market instability, with the total crypto market cap losing 5% of its value. Other major cryptocurrencies also faced steep declines. Ethereum, Solana, and BNB each recorded losses exceeding 7%.

The increased volatility triggered a liquidation spree, wiping out over $555 million in leveraged positions, according to CoinGlass. More than 239,000 traders faced forced liquidations, with long traders—those betting on price increases—suffering the heaviest losses, amounting to $491 million.

Short traders, anticipating price declines, lost approximately $63 million.

The turmoil follows US President Donald Trump’s decision to enforce stringent tariffs on major trading partners, including Canada.

The administration claims the move is designed to curb the flow of undocumented immigrants and illicit substances into the US. However, the tariffs have sparked concerns about inflationary pressure on American consumers.

In response, Canadian Prime Minister Justin Trudeau announced retaliatory measures, imposing 25% tariffs on $106 billion worth of American imports.

The first round of levies, targeting $30 billion in goods, will take effect immediately, with an additional $125 billion in tariffs scheduled in the coming weeks.

Bitcoin Network Sees Sharp Drop in Transactions

Beyond market turbulence, Bitcoin’s network activity has declined significantly, with the mempool—the waiting area for unconfirmed transactions—showing a notable reduction in volume.

On February 1, data from CryptoQuant shows that the mempool is nearly empty, indicating a steep drop in transaction volume. The data further reflects that Bitcoin transaction fees have dropped to 1 sat/vB, signaling reduced demand for block space.

This marks the lowest level of transaction activity since March 2024.

This trend raises concerns about Bitcoin’s usage as a medium of exchange, with some analysts suggesting that the growing perception of BTC as digital gold may discourage transactional use.

Bart Mol, host of the Satoshi Radio Podcast, criticized the shift in narrative, stating that celebrating an empty mempool overlooks the potential risks to Bitcoin’s foundational role. He likened it to “wood rot” in a house’s foundation, warning that a lack of transaction activity could undermine Bitcoin’s core functionality.

“Bitcoiners celebrating that the mempool cleared is one of the most retarded things I’ve seen in a while. The digital gold narrative is slowly destroying the foundation of Bitcoin, like wood rot in the foundation of a house,” Mol wrote.

Indeed, Mol’s comment aligns with Bitcoin’s increasing adoption as a reserve asset. Several corporations and governments have begun considering Bitcoin for their treasuries. These narratives reinforce the token’s position as a long-term store of value rather than a transactional currency.

However, the ongoing decline in on-chain activity raises questions about Bitcoin’s long-term utility beyond being a digital gold reserve.

As the crypto bull run continues to stall, the Bitcoin (BTC) market remains in consolidation moving mostly between $101,000 – $106, 000 over the past two weeks.  Interestingly, a market analyst with X username cryptododo7 has shared a potential pathway for BTC to reestablish its bullish momentum. However, this theory includes an initial significant price dip.

The Trump Effect: Why Bitcoin May Need To Return To $76,000 

Based on his campaign promises, US President Donald Trump secured a substantial following in the digital asset space who yearned for a crypto-friendly administration.

Due to these expectations, Trump’s eventual victory as US President spurred Bitcoin to surge to $108,000 which was followed by a correction to below $90,000. Analyst cryptododo7 explains these movements were orchestrated by market makers who ensured BTC returned to $108,000 as Trump assumed office on January 20.

The analyst claimed these market makers utilized new market entrants who bought Bitcoin at high prices as exit liquidity. This market sale resulted in a fall in Bitcoin’s price as seen in both instances. With Bitcoin now stuck in a range-bound market, cryptododo7 states there is a need for the premier cryptocurrency to return to $76,000 in order to restart a new rally. 

This prediction is based on technical factors such as the double top formation and the short-term Wyckoff Distribution Scheme, both of which indicate BTC is due for a major decline. However, cryptododo7’s selection of $76,000 as a potential target stems from multiple reasons including the fact that this price level serves as a strong support and liquidity mop-up zone having been a region of strong buying interest.

Furthermore, a pullback to $76,000 would finally allow the Bitcoin market to absorb the excess demands of new market entrants who previously bought at high prices. In addition, this price correction will present institutional investors to actively accumulate BTC against the next rally. Cryptododo7 predicts the next bull rally will definitely occur provided Bitcoin retests to $76,000 and finds sufficient support at this price level. 

BTC Price Overview 

At the time of writing, BTC trades at $99,659 after a 2.74% decline in the past day. Meanwhile, the asset’s daily trading volume has plummeted by 31.29% suggesting a significant decline in traders’ interest.

To make any significant uptrend, Bitcoin faces a major resistance at $106,0000, moving past which may push the asset to new price regions. With a market cap of $1.99 trillion, BTC remains the most valuable cryptocurrency boasting a market dominance of 58.6%.

Featured image from Unsplash, chart from Tradingview

European Central Bank President Christine Lagarde has decreed that Bitcoin will never find its way into the vaults of an EU central bank.

In a recent statement, Lagarde pointed out that Bitcoin does not possess the defining characteristics of any reserve asset-liquidity, security, or stability.

She made the comment in response to a growing debate over Bitcoin’s potential role in national reserves after a proposal was made by a Czech central banker.

Bitcoin Fails To Meet Reserve Asset Standards: ECB

Lagarde’s rejection of Bitcoin as a reserve asset continues in light of the traditional skepticism of cryptocurrencies by the ECB. She remarked that Bitcoin remains volatile and without a central controller, making it unsuitable to be used by central banks in their reserves.

Unlike gold and government bonds whose value is safeguarded by such a central institute, Bitcoin stands out as uncertain and unreliable as an asset class during economic fluctuations, she said.

European Central Bank President Christine Lagarde says Bitcoin will not be included in any EU central bank reserves. pic.twitter.com/OH01YiG5e5

— Altcoin Daily (@AltcoinDailyio) January 30, 2025

The comments from the ECB president came in response to Czech National Bank Governor Aleš Michl, who suggested including Bitcoin in the national reserves of the Czech Republic.

Although the Czech Republic is not a eurozone country, its central bank is still represented on the General Council of the ECB, meaning that its policy debates are part of the general European financial framework.

Lagarde, however, quickly shot down the suggestion, further entrenching the cautious position of the ECB on digital assets.

The message from the ECB president echoes the viewpoint that Bitcoin could not be maintained in their vaults. Other banks of Europe do share the views of ECB of Poland; Romania also said that these cryptocurrencies will probably be kept off their official balances.

Stance Vs. Crypto

Even beyond Europe, major institutions such as the US Federal Reserve have taken a firm stance against holding Bitcoin. Fed Chair Jerome Powell had earlier said the US central bank is legally prevented from placing Bitcoin in its reserve, making the chasm between the old financial system and the currency even clearer.

Many lawmakers are hesitant about Bitcoin because they are worried about unclear regulations, its tendency to have price spikes, and its limited use for everyday transactions.

Some countries are becoming more open to Bitcoin, but most large economies still think it’s too risky to keep in their government reserves.

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Bitcoin’s Place In The Global Financial System

Despite its rejection by central banks, Bitcoin is a major force in global finance. It has gained traction as a store of value among institutional and retail investors alike, with some even referring to it as “digital gold.”

Featured image from Sky News, chart from TradingView