Market Value Erased, Key Support Levels Breached
Bitcoin (BTC) has deepened its decline, shedding almost $800 billion in market value since its October peak.
The selling wave that has continued in recent weeks has erased all the cryptocurrency’s gains throughout the year, bringing the question of “How long can this decline last?” back to the forefront in the market.
Bitcoin, which reached a year-high of around $125,000 on October 6th, has lost a third of its value since then. It fell below $82,000 today and has since recovered slightly to $83,509. According to CoinGecko data, this price represents Bitcoin's lowest level since April. Bloomberg reported that Bitcoin is on track for its worst monthly performance since the 2022 crash.
Factors Contributing to the Downturn
Market uncertainty appears to have severely dampened risk appetite for crypto assets. Wall Street discussions suggesting that AI stocks may be overvalued have raised the possibility of a bubble in the tech sector. Analysts believe the tension in tech stocks is also weighing on Bitcoin.
Function CEO Thomas Chen stated that the current environment has left investors hesitant, saying, “In this environment, the question of ‘Do I want to hold Bitcoin?’ is coming to the fore again.”
Coin Bureau co-founder Nic Puckrin also highlighted the strong correlation between tech markets and cryptocurrency, saying, “When technology sneezes, Bitcoin inevitably catches a cold.”
In addition, signals of weakening employment data and the increasing possibility that the Fed will postpone the interest rate cut at its December meeting are accelerating the flight from risky assets.
The Role of Leveraged Trading in Amplifying Losses
One of the key reasons for the decline is the dissolution of leveraged trading. Futures products offering up to 10x leverage for Bitcoin on major platforms like Coinbase can cause even small price movements to turn into massive losses.
When leveraged positions become unprofitable and investors can't afford the collateral, platforms automatically liquidate them. This mechanism rapidly intensifies selling pressure, further exacerbating the decline.
“Even the slightest reversal in positions opened with excessive leverage triggers liquidations and accelerates the decline,” said Nigel Green, CEO of deVere Group.
Historical Context and Potential for Recovery
Experts remind that major declines in Bitcoin are not uncommon historically and often result in strong recoveries.
Siebert Financial analyst Brian Vieten noted that Bitcoin has experienced five major corrections of 20-30 percent or more during bull markets, saying the current pullback could be a “temporary correction.”