Bitcoin (BTC) experienced a significant downturn, falling to $80,600 on Friday and extending its weekly losses to over 10%. This decline has resulted in a monthly drawdown of 23%, the steepest since June 2022. The price drop below $84,000 also led Bitcoin to test its 100-week exponential moving average, a level not seen since October 2023, which coincided with the beginning of the current bull cycle.
The severity of the current downturn was underscored by Bitcoin futures liquidations surpassing $1 billion. The Kobeissi Letter characterized this period as the "fastest bear market ever."
Key Observations
- •The total cryptocurrency market capitalization has decreased by 33% since October, indicating a rapid structural unwind.
- •Record fund outflows and negative ETF flows suggest persistent institutional selling pressure.
- •A key macroeconomic liquidity indicator, the National Financial Conditions Index (NFCI), is trending lower. Historically, this has preceded Bitcoin rallies by four to six weeks.
Crypto Market Cap Collapses as Structural Selling Accelerates
Since October 6, the total cryptocurrency market cap has fallen from $4.2 trillion to $2.8 trillion, representing a 33% drawdown. The Kobeissi Letter described this as "one of the fastest-moving crypto bear markets ever," with intensified selling across all major sectors. The newsletter also noted that digital asset investment products are reflecting this stress, with crypto funds recording $2 billion in weekly outflows, the largest amount seen since February.
This marks the third consecutive week of net selling, leading to total outflows of $3.2 billion over the period. Bitcoin accounted for the majority of these withdrawals with $1.4 billion in redemptions, followed by Ethereum with $689 million. These figures represent some of the largest weekly losses for these assets in 2025.
Average daily outflows as a share of assets under management (AUM) have reached all-time highs, pushing total AUM down to $191 billion, a 27% decrease from October. Analysts have classified this trend as a clear structural decline rather than mere short-term panic.
The pressure is further exacerbated by US exchange-traded fund (ETF) flows. Spot BTC ETF flows remain negative, reinforcing the sell-off. BlackRock's spot ETF is currently on track for its largest weekly outflow ever, approaching the record of $1.17 billion set in February 2025.
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A Macroeconomic Shift Could Give Bitcoin a Liquidity Lead
While many analysts continued to predict a Bitcoin bottom based on technical charts and on-chain data, Miad Kasravi adopted a different perspective. Kasravi conducted a decade-long backtest of 105 financial indicators, identifying the National Financial Conditions Index (NFCI) as one of the few metrics that reliably leads Bitcoin by four to six weeks during significant macroeconomic regime shifts.
This pattern was observed in October 2022, when easing financial conditions preceded a 94% rally, and again in July 2024, when tightening conditions signaled stress several weeks before Bitcoin surged from $50,000 to $107,000.
Currently, the NFCI stands at -0.52 and is trending downwards. Historically, a 0.10 point decline in the index has corresponded with approximately 15–20% upside in Bitcoin. A deeper move towards -0.60 typically signifies an acceleration phase. December also presents a critical catalyst: the Federal Reserve's plan to rotate mortgage-backed securities into Treasury bills.
Kasravi noted that although this operation is not labeled Quantitative Easing (QE), it could inject liquidity in a manner similar to the 2019 “not-QE” event, which preceded a 40% Bitcoin rally.
If the NFCI continues to decline into mid-December, it would indicate the early stages of a new liquidity expansion window. Given the index's consistent four-to-six week lead time during past regime shifts, Bitcoin's next major cyclical move would align with early to mid-December 2025, potentially marking a significant inflection point for market participants monitoring macroeconomic conditions.
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