In early October, Bitcoin reached its all-time high of $126,198. Following its fourth death cross since 2023 on November 16th, when the 50-day moving average fell below the 200-day moving average, Bitcoin's price has decreased by 33% to $84,000.
Market sentiment is now at 11, categorized as "extreme fear" on the Fear and Greed Index, the lowest recorded since July 2023. Historically, such conditions have presented the best opportunities for long-term investment as markets experience panic, tourists exit, and strong hands accumulate.
However, the recent abrupt closure of Michael Burry's hedge fund, Scion Asset Management, on November 10th, has led investors to question whether Bitcoin's latest death cross signifies a more substantial downturn, potentially foreshadowing an even greater price drop.
This article examines the prevailing narratives influencing Bitcoin's price in both upward and downward directions.
Putting Bitcoin’s Death Crosses in Context
Historically, Bitcoin's death crosses have often been followed by double-digit gains within a couple of months. While monthly returns have been mixed, with a median return of 0.25% to 2.35%, these crosses generally indicate a slowdown that has already occurred rather than predicting future movements.
As indicators of local bottoms that signal a slowdown in medium-term momentum, Bitcoin's death crosses should not be interpreted as direct sell signals. Investors have historically seen median returns of up to 26% within three months following these events.
With a price crash below the $90,000 resistance zone, Bitcoin's current support level is at $85,000. The hourly Moving Average Convergence/Divergence (MACD) indicator is moving in a bearish direction, suggesting that the BTC price may continue to decline, reflecting the current macroeconomic landscape.
Macro-Powered Death Cross
In recent analyses of Michael Saylor’s Strategy (NASDAQ: MSTR), the pivotal role of President Trump in inflating the crypto market, with Bitcoin at the forefront, was discussed. However, as it becomes increasingly evident that President Trump's actions may not align with broader American interests, this can lead to demoralization within his base and the wider political process.
This demoralization can, in turn, deflate the narrative surrounding Bitcoin. The powerful psychological backdrop, where individuals feel system-locked regardless of voting choices, should not be underestimated.
Furthermore, the Federal Reserve is increasingly unlikely to stimulate significant liquidity through further rate cuts during 2026. With the passage of the One Big Beautiful Bill Act (OBBBA) and the establishment of a new tariff regime, bolstered by Europe's economic situation, the following year is expected to be stable enough to preclude drastic Fed interventions.
In this context, Fed Governor Christopher Waller expressed support for another rate cut in December due to the weakening labor market. According to CME's FedWatch, this would place the Fed's funding rate in the 3.50-3.75% range, with a 73.3% probability of a 25 basis point December rate cut.
However, the narrative of a "December rate cut" is likely to be overshadowed by the Fed's broader hawkish stance, which suggests that interest rate policy will remain restrictive well into 2026, thereby limiting any sustained recovery rally for Bitcoin.
Bitcoin’s Price Relies on Institutional Support
Mirroring the bear market period of February and March, when BTC price fell below $80,000, Bitcoin spot ETF inflows have also experienced significant selloffs, as indicated by red outflows on relevant charts.
Despite these outflows, when considering the total cumulative ETF flow since their launch in early 2024, this represents a minor dip. The current cumulative flow of $57.37 billion is roughly in line with levels seen in late September, just prior to Bitcoin reaching its all-time high of $126,000.
During this period, Harvard University's endowment significantly increased its exposure to Bitcoin through BlackRock's 6.8 million IBIT shares, valued at $442.8 million at the time. Such conviction from a university endowment suggests that sophisticated investors may be increasing their Bitcoin holdings.
Following a week-long selloff streak that continued from the previous week, ETF flows on Wednesday turned positive with an inflow of $75.47 million. However, this trend reversed significantly on Thursday with the largest daily selloff since late February, amounting to $903.11 million, according to SoSoValue tracking.
If inflows stabilize in the coming weeks, Bitcoin could regain its footing above the $90,000 resistance zone, setting the stage for another accumulation phase. Currently, institutions appear to be buying selectively, awaiting clearer macroeconomic signals before fully committing.
In essence, retail panic is encountering institutional appetite, which will determine the sustainability of Bitcoin's next price movement.