Bitcoin has recently shown signs of strain. Although a weaker US dollar had prompted traders to shift funds from cryptocurrencies to gold and silver for macro hedging, Bitcoin is now falling in tandem with precious metals, caught in a broad risk-off selling wave, further highlighting its identity as a high-risk asset.

On January 29, the price of Bitcoin broke below the $85,000 mark, at one point falling sharply by 6.8% intraday to touch $83,383.33. At the time of writing, it was trading at $84,480, down 5.39%.

Ethereum and Dogecoin, among others, saw declines exceeding 8% at one point.

Data from Coinglass shows that over the past 24 hours, more than 220,000 traders across the cryptocurrency market were liquidated, resulting in $1.006 billion (approximately 70 billion yuan) being wiped out.

Chris Newhouse, Director of Business Development at Ergonia, pointed out that the day's weakness underscores the positioning of crypto assets in the market, where they often act as a "leverage amplifier" for traditional risk assets. As tech stocks continue to face pressure, the digital asset market has further amplified the overall selling sentiment. Simultaneously, over-leveraged long positions are being cleared, creating mechanical selling pressure that further burdens an already fragile market.

The decline in Bitcoin also dragged down the performance of related crypto concept stocks. Shares of digital trading platform Coinbase Global (COIN.US) and mining company MARA Holdings (MARA.US) fell by nearly 5%.

Analysts believe that the reversal of the Yen carry trade in traditional markets is also intensifying the pressure. Matt Maley, Chief Market Strategist at Miller Tabak & Co., noted that the Yen carry strategy typically involves borrowing low-interest Yen to invest in higher-yielding assets for returns, and its unwinding often signals a tightening of global liquidity.

"Bitcoin and other cryptocurrencies are assets highly dependent on liquidity. They rise when liquidity is abundant; they fall when liquidity diminishes," Maley stated. "And the Yen carry trade is one of the best indicators for gauging the level of systemic liquidity."

Analysts from J.P. Morgan Private Bank pointed out that although the US Dollar Index (DXY) has fallen by 10% over the past year, Bitcoin has declined by 13% over the same period, failing to rise as it typically did during previous periods of dollar weakness. The analysts explained that this recent dollar decline is primarily driven by short-term capital flows and sentiment, rather than a fundamental shift in economic growth or monetary policy expectations; in fact, since the start of the year, US interest rate differentials have still moved in favor of the dollar. Currently, Bitcoin is behaving more like a liquidity-sensitive risk asset than a store of value (like gold), and in the absence of a clear shift in monetary policy, dollar weakness alone is insufficient to attract new capital into the crypto market.

Currently, investors are closely watching whether the $80,000 level can become Bitcoin's next key support. Against a backdrop of declining risk appetite, accelerating leverage liquidations, and a tightening liquidity environment, the crypto market may still face greater volatility in the short term.