Bitcoin collapsed on Thursday, falling sharply alongside other risky assets after the stock market saw a huge reversal following an earlier rally.
The latest crypto declines have now erased more than $1 trillion in market value since early October, when the crypto market cap was around $4.2 trillion. As of Thursday, that figure was less than $3 trillion.
On October 10, a massive liquidation event unexpectedly sent crypto markets into a tailspin. This is the largest bitcoin selloff in history, with investors selling off $19 billion in leveraged positions; however, some estimates suggest the real figure is closer to $30 billion.
More than a month later, conditions have not improved and the fall of Bitcoin has taken other coins with it. Bitcoin was trading at $86,398 on Thursday, down 31% from its October 6 high above $126,000. The token is now in the red for the year, down more than 5% to date.
The current crypto bear market appears to be testing even the most staunch Bitcoin bulls, who fear a deeper market freeze will set in until a new catalyst can bring new upside.
“Wealthy Bitcoin investors are selling and ETFs are seeing outflows,” read a report from crypto asset manager 21Shares. “Long-term investors unloaded around 42,000 BTC (~$4 billion) this month, while Bitcoin spot ETFs saw three straight weeks of outflows. On Thursday alone, $866 million in redemptions were recorded, the second-largest day on record.”
The firm’s strategists cited a combination of technical factors and macroeconomic pressures that continue to push bitcoin and other cryptocurrencies lower. Prices remain volatile due to forced liquidations and low market liquidity, while comments about the lower likelihood of a Fed rate cut next month hurt the bullish case for risk assets like Bitcoin.
Satraj Bambra, The CEO of hybrid crypto exchange Rails noted that casualties from the October crisis are still piling up, especially as market conditions remain delicate.
“We’re probably close to a local bottom,” he said. “The market should see a reflexive rebound as positioning resets. But if this rebound doesn’t sustain and buyers don’t intervene decisively, we’ll likely head lower. This is still a fragile market, and the burden of proof is on the bulls.”
