Bitcoin's Steep Decline Signals Troubled Waters for Crypto Markets
The cryptocurrency market is experiencing one of its most challenging periods in recent years, with Bitcoin leading a dramatic downturn that has investors concerned. The world's largest digital asset is currently tracking toward its worst monthly performance since the catastrophic crypto sector collapse of 2022.
On Friday, Bitcoin recorded its 11th consecutive lower low, marking the longest such negative streak since 2010. The flagship cryptocurrency plunged as much as 7.6% to US$80,553, while Ethereum, the second-largest digital asset, fell up to 8.9% to below US$2,700. Numerous smaller tokens experienced comparable declines during the same trading session.
Market Value Plummets Below Critical Threshold
The broader crypto market has suffered staggering losses, with the total market value of virtual coins dropping below US$3 trillion for the first time since April. Data from CoinGecko confirms this significant milestone, reflecting the extensive selling pressure across digital assets.
November has been particularly brutal for Bitcoin holders, with the cryptocurrency shedding approximately a quarter of its value this month alone. This represents the most severe single-month decline since June 2022, according to Bloomberg-compiled data. The current downturn evokes memories of the TerraUSD stablecoin implosion in May 2022, which triggered a cascade of corporate failures throughout the crypto industry, culminating in the dramatic collapse of Sam Bankman-Fried's FTX exchange.
Institutional Exodus and Leveraged Position Liquidations
Despite what many considered favorable conditions including a pro-crypto White House under President Donald Trump and increasing institutional adoption, Bitcoin has plummeted over 30% since reaching its record high in early October. The current rout follows devastating liquidations on October 10 that erased US$19 billion in leveraged token bets, subsequently wiping out approximately US$1.5 trillion from the combined market value of all cryptocurrencies.
The selling pressure intensified dramatically in recent days, with an additional US$2 billion in leveraged positions liquidated within just 24 hours, according to CoinGlass data. Institutions appear hesitant to capitalize on the lower prices, with a group of 12 U.S.-listed Bitcoin exchange-traded funds experiencing US$903 million in net outflows on Thursday alone. This represents their second-largest single-day redemption since launching in January 2024.
Pratik Kala, portfolio manager at Australia-based hedge fund Apollo Crypto, commented on the concerning market dynamics: "Sentiment across the board is incredibly poor. There appears to be a forced seller in the market and it is unclear how deep this goes."
Historical Wallet Activity and Investor Sentiment
Blockchain researchers identified significant selling activity from a crypto wallet labeled "Owen Gunden" that had held Bitcoin since 2011. This entity began divesting in late October, eventually selling a total of US$1.3 billion worth of Bitcoin and disposing of its final holdings on Thursday.
A comprehensive gauge measuring crypto investor sentiment has plunged to its lowest level since the 2022 market meltdown. The index, which evaluates factors including volatility, momentum, and demand, currently indicates "extreme fear" among traders. This represents a dramatic reversal from the optimistic reading of 94 recorded immediately following Trump's presidential election victory just over a year ago.
The broader financial market environment has provided little support for crypto assets. U.S. stocks, which had rallied on renewed artificial intelligence enthusiasm following positive earnings from Nvidia Corp., surrendered gains late Thursday amid concerns about stretched valuations and uncertainty regarding potential Federal Reserve rate cuts in December.
Open interest in perpetual futures has declined 35% from its October peak of US$94 billion, signaling reduced trading activity and diminished confidence among market participants. As November progresses, investors are closely monitoring whether this represents a temporary correction or the beginning of a more sustained crypto winter.
