Market Downturn and Liquidations
This week saw Bitcoin’s value plummet drastically, ending below $85,000 for the first time since April, resulting in widespread market turmoil. The significant decrease instigated a chain of liquidations in leveraged positions, wiping out nearly $2 billion in market holdings. November could become the cryptocurrency market’s harshest month since the 2022 crypto winter.
What Caused the Leverage Crash?
Bitcoin rapidly descended to $81,600, causing widespread weekly losses for most cryptocurrencies. Ethereum fell to below $2,750, marking a 14% decrease over the last week, while Solana saw a 10% reduction in just 24 hours. Other notable altcoins, such as XRP, BNB, and Cardano, reported losses ranging from 8% to 15%.
Data from CoinGlass revealed that 396,000 investors were liquidated in the past day, with total liquidations amounting to $1.96 billion. A significant portion came from Bitcoin alone, with $964 million in liquidations witnessed, the largest being a $36.7 million BTC position on Hyperliquid exchange.
Global Market Weakness and Wider Impact
The cryptocurrency dip mirrored declines in global equity markets, as the MSCI Global Index recorded losses over 3%. U.S. tech stocks also faced selling pressure as falling bond yields prompted investors to shy away from risky assets.
Additional cryptocurrency-specific issues exacerbated the downturn. Spot Bitcoin ETFs in the U.S. recorded net outflows surpassing $900 million in a day, the second-largest since their introduction in early 2024. The Crypto Fear and Greed Index, a barometer for retail sentiment, plunged to 11, highlighting “extreme fear.” Such levels have historically been seen at market bottoms, yet current technical indicators offer no hints of recovery.
- •Bitcoin dropped to $81,600, affecting Ethereum, Solana, XRP, BNB, Cardano.
- •396,000 investors liquidated, with Bitcoin trades alone accounting for $964 million in liquidations.
- •Falling bond yields and global equity losses mirrored the crypto downturn.
A significant selling wave has dampened investor risk appetites, causing market liquidity to contract sharply. The perpetual futures market’s open positions saw a 35% reduction since October’s $94 billion peak.
“The significant shift in investor sentiment has led to a marked decrease in market confidence,” an industry expert remarked.
As the market navigates these turbulent times, the lack of any signs of recovery continues to concern market participants. The ongoing situation demands a cautious approach, while investors hope for a shift in the market dynamics soon.