5 Reasons Behind the January 8 Sell-Off

If you're checking your crypto portfolio this morning and seeing red, you're not alone. Bitcoin dropped below $91,000 on January 8, 2026, with most altcoins following suit. Here are the five main reasons driving today's sell-off.

1. Fear & Greed Index Plummets to Panic Territory

The Crypto Fear & Greed Index crashed to 28-29, firmly in "panic" territory—down 14 points and marking the worst sentiment reading since the late-2025 crash. When this index drops below 30, it signals widespread anxiety, heavy selling pressure, and risk aversion. While contrarian investors view extreme fear as a buying opportunity, most traders are either sitting on the sidelines or actively selling.

2. Profit-Taking After Early January Rally

Bitcoin climbed 6-8% in early January, rising from $85K to nearly $94K, prompting traders to lock in gains. After failing three times to break the crucial $94,500 resistance over five weeks, short-term holders decided to cash out rather than risk a deeper pullback. Classic profit-taking after a strong rally.

3. Bitcoin ETF Outflows Signal Weak Demand

Institutional money is flowing out. Bitcoin spot ETFs saw $243 million in outflows on January 7, with BlackRock as the only major buyer (+$228M). Fidelity led the exodus with $312 million in withdrawals—the largest single-day outflow. This reverses the ETF enthusiasm that drove Bitcoin to record highs in October 2025. Without institutional demand, Bitcoin lacks buying pressure to sustain rallies.

4. Sector-Wide Losses Hit Altcoins Hard

Nearly every crypto sector is bleeding:

• RWA: Down 3%
• DeFi, Layer 2, PayFi: Notable declines
• Ethereum: Down 3%, below $3,200
• XRP: Plunged 7% after failing to break $2.40

SocialFi rose modestly, but with 65 of the top 100 coins down, this is clearly a market-wide sell-off.

5. Weak Momentum and Low January Liquidity

January's historically low liquidity amplifies price swings as traders return from holidays. Bitcoin's inability to hold above $93,000 has weakened momentum, and subdued trading volumes mean there's not enough buying power to absorb selling pressure.

What's Next?

Despite losses, Bitcoin is still up for 2026. Bernstein analysts maintain the bottom is in from late 2025. Watch $91K support (current) and $88K next. Resistance sits at $94,500, then $96,000. If Fear & Greed stays in panic without price collapse, contrarians may accumulate. But breaking $88K could mean retesting $80K from late 2025.

References:

• SoSoValue ETF data (January 7, 2026)
• CoinMarketCap Fear & Greed Index
• Cryptonews.com market analysis
• CoinDesk sector performance data