Crypto executives are speculating that outflows from crypto exchange-traded funds, long-term whale sales, and escalating geopolitical tensions may be contributing factors to the recent market slump, which saw Bitcoin drop to nearly $93,000 on Sunday.
Bitcoin briefly fell to a year-to-date low of $93,029 on Sunday. The overall market capitalization has also experienced a pullback in the last seven days, decreasing from $3.7 trillion on November 11 to $3.2 trillion on Monday, according to CoinGecko.
Ryan McMillin, chief investment officer of Australian crypto investment manager Merkle Tree Capital, stated that the market slump is not attributable to a single cause.
Multiple Factors Impacting Crypto Prices
McMillin points to on-chain data indicating that long-term holders are "finally cashing in after an extraordinary run," citing this as one cause, alongside "good fundamentals and liquidity tail winds for the price to go much lower."
“At the same time, spot Bitcoin ETFs and other vehicles that were huge buyers earlier in the cycle have swung to net outflows just as global markets have turned more risk-off and rate-cut hopes have been pushed out.”
"Put that together and you have old coins being distributed into a softer bid in a macro environment that’s a lot less forgiving than it was six months ago," McMillin added.
Matt Poblocki, the general manager of Binance Australia and New Zealand, commented that the volatility serves as a reminder that crypto remains a maturing asset class influenced by global macroeconomic and political events.
Holger Arians, the CEO of Banxa, a crypto payment and compliance infrastructure provider, suggested that markets have been running very hot relative to the current global situation.
"We’re dealing with several unresolved and, in some cases, escalating geopolitical tensions. At the same time, global tech valuations have kept rising on future expectations. A broader risk-off moment was almost inevitable after a year of optimism," he said.
“And while crypto can sometimes move independently from traditional markets, this is one of those periods where people are simply waiting, watching, and trying to make sense of a turbulent year.”
Other crypto executives on X also shared their perspectives on the market's downturn. Hunter Horsley, CEO of Bitwise Asset Management, believes the four-year cycle narrative may be responsible for the market pullback, suggesting that traders become spooked by the idea of a downturn every few years and contribute to it by selling.
Tom Lee, the chairman of Ether Treasury company BitMine, thinks that market makers with "a major hole" in their balance sheet might be falling prey to sharks circling to trigger liquidations.
Sharp Corrections Are a Regular Market Occurrence
Despite the recent price drops, most crypto analysts maintain that the underlying market remains in a strong position.
"These kinds of sharp corrections are a normal part of a market cycle," said Poblocki.
“What’s important is that we continue to see retail investors staying invested in the market and rotating toward blue-chip assets like Bitcoin and Ethereum rather than exiting altogether. That’s a strong sign of long-term confidence.”
"ETF flows have softened slightly in line with broader risk sentiment, but we’re not seeing major redemptions. The bigger picture hasn’t changed - that institutional participation remains high, and retail investors are taking a more disciplined approach," he added.
Arians indicated that the market pullback could reverse as fundamentals continue to improve. He cited increasing regulatory clarity, more real-world use cases, and frequent instances of traditional finance making bold moves into crypto as positive indicators.
"Even though prices feel soft, the infrastructure story underneath has never looked stronger. Stablecoin volumes, on-chain activity, developer momentum, all moving quietly in the right direction. The market might feel slow, but the rails being laid now are setting up the next cycle," Arians added.
Crypto Market Shows Strength Compared to Previous Cycles
McMillin shares a similar view to macro analyst and Wall Street veteran Jordi Visser, who believes that long-time Bitcoin holders are simply selling to new traders who are ready to absorb the supply.
"In prior cycles, with this level of long-term holder selling, we would have seen a 70–80% drawdown by now; instead, despite very heavy OG distribution, prices are down far less because ETFs and other institutional channels are deep enough to absorb a lot of that stock," he said.
“That’s a sign of a maturing market, and a necessary movement of coins from the few to the many.”