Published & Updated: January 29, 2026 | Tapbit On-Chain & Macro Analysis
Bitcoin suffered one of its sharpest short-term corrections of 2026 over the weekend of January 25–26, dropping from ~$89,000 to a local low of $87,892 — a ~2.1% flash move that triggered over $1 billion in leveraged liquidations across exchanges and liquidated more than 100,000 traders in a matter of hours. The sell-off came amid thin weekend liquidity, renewed macro caution after the Federal Reserve held rates steady at 3.50–3.75% on January 28, continued spot ETF outflows (~$1.3B weekly), and elevated geopolitical/tariff risk premiums. BTC quickly rebounded and is consolidating near $88,950–$89,300 as of January 29, but volatility remains high (30-day realized vol ~27–38%).
Fundstrat’s Tom Lee — one of the most followed Wall Street crypto voices — reiterated his 2026 thesis during recent interviews: expect upper-half turbulence through mid-year due to institutional rebalancing and macro uncertainty, followed by a strong second-half rally potentially pushing BTC toward $120,000–$170,000 as ETF absorption accelerates and long-term holders remain net buyers. This guide dissects the flash-crash mechanics, liquidation cascade, on-chain signals, technical support zones, Tom Lee’s full 2026 framework, and how traders can position on Tapbit to navigate the chop or capture the anticipated H2 upside.
Timeline of the January 2026 Bitcoin Flash Crash
| Date / Session (UTC) | Price Range | Change | Key Trigger / Volume Spike |
|---|---|---|---|
| Jan 24–25 | $92,200 → $89,800 | -2.6% | Pre-Fed positioning + weekend thin liquidity |
| Jan 26 (Sunday Asia–US) | $89,800 → $87,892 (low) | -2.1% | >$1B liquidations in 4 hours; 100k+ traders wiped |
| Jan 27 (Monday) | $87,892 → $89,100 | +1.4% | Dip-buying + short covering |
| Jan 28 (FOMC day) | $89,100 → $90,600 (intraday high) | +1.7% | Initial relief rally after Fed hold |
| Jan 29 (current) | ~$88,950–$89,300 | -1.2% intraday | Consolidation; volume drying up |
The weekend low of **$87,892** marked the deepest single-session drawdown of 2026 so far, but the rapid V-shaped recovery and absence of follow-through distribution prevented a deeper capitulation toward $80k–$82k.
What Triggered the $87,892 Flash Crash?
Five overlapping catalysts converged during low-liquidity weekend trading:
- Fed Rate Hold & Mixed Signals The FOMC held rates at 3.50–3.75% on Jan 28 (as expected), but two dissents for a cut (Miran, Waller) created uncertainty rather than clear dovish relief. Markets read it as “higher-for-longer” into mid-2026.
- Heavy Spot ETF Outflows Cumulative weekly net redemptions reached $1.3 billion (largest since Feb 2025), led by BlackRock IBIT and Grayscale GBTC → direct downward pressure on spot BTC.
- Stablecoin Liquidity Squeeze USDC supply contraction (~$6.5B burned recently) reduced on-chain leverage capacity, forcing deleveraging across perps and lending protocols.
- Weekend Thin Markets + Leverage Flush Low weekend volume amplified moves; over $1 billion in leveraged positions were liquidated in hours, creating a classic cascade.
- Macro & Geopolitical Overlay Renewed tariff threats (autos, pharma, lumber), US–NATO Greenland rhetoric, and Middle East flare-ups added risk-off sentiment, rotating capital toward gold ($2,680+) and Treasuries.
Tom Lee’s 2026 Bitcoin Outlook – Upper-Half Turbulence, Strong H2 Rally
Fundstrat’s Tom Lee — consistently one of the most accurate Wall Street crypto forecasters — reiterated his 2026 framework in recent interviews:
- H1 2026 (upper-half): Expect continued volatility and choppy consolidation as institutions rebalance after 2025 gains, ETF flows normalize, and macro uncertainty (Fed path, tariffs) keeps pressure on risk assets.
- H2 2026 Rally: Strong second-half upside driven by renewed ETF absorption, long-term holder conviction, reduced selling pressure after rebalancing, and potential Fed pivot if inflation continues cooling.
- Price Targets: Lee maintains $120,000–$170,000 range for year-end 2026, with $150,000 as base case.
Lee’s view aligns with analysts like Carol Alexander (projecting $75K–$150K centered at $110K) and CoinShares (bullish on H2 institutional flows), but contrasts with more bearish voices expecting prolonged correction below $80K if ETF outflows persist.
Technical Levels & Recovery Signals (BTC/USD)
Current ~$88,950–$89,300 (Jan 29 close)
- Immediate Support: $87,500–$88,000 (prior breakout cluster)
- Critical Support: $86,000–$86,400 (2026 low; high-volume zone)
- Next Resistance: $90,000–$91,000 (round number + 50-day EMA)
- Recovery Target: $94,000–$96,000 (Fib 0.618 retracement from Dec high)
- RSI (Daily): ~42 → oversold, room for bounce
- Volume Profile: Drying up on downside candles → selling exhaustion
Bullish confirmation: sustained trade above $90,000 + ETF inflow reversal would signal the $86,400–$87,892 zone as the cycle low. Bearish break below $86,000 risks deeper test toward $80K–$82K.
Trading Strategies & Positioning on Tapbit
- Create your Tapbit account (0% maker fees)
- Deposit USDT or JPY via bank transfer / P2P
- Spot DCA accumulation: Buy BTC/USDT on dips toward $87,500–$88,000 (high-conviction demand zone)
- Futures rebound play: Long BTC/USDT perpetuals on reclaim of $90,000 (20–50x leverage, isolated margin)
- Macro hedge: Long XAU/USDT perpetuals if risk-off sentiment re-intensifies
- Risk control: Max 1–2% account risk per trade; trailing stops below $86,000
FAQs – Bitcoin $87,892 Crash & 2026 Outlook
What caused Bitcoin to drop to $87,892 in January 2026?
Fed’s rate hold at 3.50–3.75% reduced early-cut expectations, $1.3B ETF outflows added pressure, stablecoin contraction reduced liquidity, and weekend thin markets amplified liquidations.
Is $87,892 the 2026 bottom?
Strong possibility if $86,000–$88,000 support holds. ETF inflow reversal + volume exhaustion on downside candles support the case; break below $86,000 risks deeper correction.
What is Tom Lee’s Bitcoin price target for 2026?
Lee expects upper-half turbulence through mid-2026, followed by a strong H2 rally toward $120,000–$170,000, with $150,000 as base case.
Should I buy Bitcoin after the dip?
$87,500–$88,000 offers favorable risk/reward for DCA entries. Confirmation above $90,000 signals recovery; below $86,000 risks deeper test toward $80K–$82K.
Conclusion & 2026 Outlook
Bitcoin’s sharp weekend drop to $87,892 in late January 2026 — the deepest correction of the year so far — was driven by the Federal Reserve’s decision to hold rates at 3.50%–3.75%, $1.3 billion in spot ETF outflows (largest weekly since Feb 2025), stablecoin liquidity contraction, and weekend liquidation pressure. The swift rebound and stabilization near $88,950–$89,300 suggest selling exhaustion, with on-chain metrics showing continued long-term holder accumulation and declining exchange balances. Tom Lee’s framework — upper-half turbulence through mid-2026 followed by a strong H2 rally toward $120K–$170K — aligns with many institutional analysts who see ETF absorption and reduced selling pressure as key drivers once rebalancing concludes.
Trade Bitcoin dips & Fed-related volatility on Tapbit:
Disclaimer: Cryptocurrency trading involves significant risk of loss. Prices are highly volatile and can change rapidly. ETF flows and Fed decisions are subject to interpretation. This article is for informational purposes only and does not constitute investment advice. Always conduct your own research (DYOR) and never invest more than you can afford to lose completely.
