The cryptocurrency market extended its losses from Monday Tuesday morning as Bitcoin fell below $104,000, dropping to levels not seen since late June.
At press time, the price of Bitcoin was $103,849, down 3.2% on the day, according to CoinGecko data.
This sudden decline results from a combination of a deepening Challenge crisis and lingering macroeconomic fears that have triggered a broad trend toward risk aversion, analysts said. Decrypt.
Bitcoin is now down 17.5% from its record high set in early October. The sell-off spread to major altcoins, with Ethereum, XRP, BNBAnd Solana showing 24-hour losses of between 5% and 9%.
Crypto liquidations over the past 24 hours have climbed to $1.37 billion at the time of writing, according to CoinGlass data.
Market sentiment has visibly deteriorated, with the annualized premium for futures contracts on major exchanges falling from around 7% to less than 4% over the past week, according to Velo data, indicating that investors are less willing to pay a premium for bullish bets.
Users reflected the bearish sentiment, with greed falling from 59% on November 1 to 51.9%, according to data from prediction market Myriad, launched by Decrypt parent company Dastan. Myriad users have also turned bearish on the price of Bitcoin, estimating that there is a 71% chance that Bitcoin’s next move will take it to $100,000 instead of $120,000, up from 44% on November 3.
The immediate catalyst is a crisis of confidence emanating from the decentralized finance sector, said Derek Lim, head of research at market-making firm Caladan. Decrypt. DeFi protocol Stream Finance disclosed $93 million in fund asset losses Monday morning, it noted, while “total bad debts in lending markets are estimated at $284 million.”
Lim explained that the situation has triggered “fears of contagion spreading across DeFi,” with several stablecoins and vaults exposed and forced redemptions.
The analyst pointed to a series of previous issues that have eroded confidence, including the recent $128 million Balancer exploit and the lingering impact of October’s historic liquidation event.
“Confidence was already shaken before Stream implosion,” Lim said, adding that “any catalyst is going to amplify risk aversion” in a system that still contains very high debt levels.
“The current crypto market crash reflects a market-wide sense of de-risking or risk aversion as traders unwind their leveraged positions amid macro uncertainty,” said Ryan Lee, chief analyst at Bitget. Decrypt.
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Lim pointed to weak US jobs data, a seemingly more hawkish Federal Reserve, and renewed uncertainty around the US government shutdown, amplifying the aforementioned internal crypto issues. “Risk assets are being abandoned in traditional and crypto markets,” he said, with volatility in the bond market further disrupting investors.
