Bitcoin’s price has fallen below $98,000, resulting in the liquidation of over $700 million in long positions and causing considerable concern among traders. This decline marks the third time this month that Bitcoin has dipped below this crucial threshold. The overall cryptocurrency market has experienced a sharp downturn, with Bitcoin already down more than 10% in November, a month previously anticipated to be bullish.
Key Factors Behind the Decline
The recent price drop can be attributed to a significant decline in crypto-related stocks, which has had a cascading effect on the broader market. Shares of major players in the cryptocurrency sector have decreased sharply, with Cipher Mining down 14.4%, Riot Platforms and Hut 8 both falling about 13%, and MARA Holdings and Bitmine Immersion losing over 10%. Even larger firms like Coinbase and MicroStrategy have seen their stock prices decline by 7%.
This sell-off coincided with a slump in the technology sector, where the Nasdaq composite index dropped by 2% and the S&P 500 fell by 1.3%. The downturn in the tech market has further compounded the pressures on Bitcoin and related assets.
Additionally, expectations for a potential interest rate cut by the Federal Reserve in December have diminished. Recent statements from Fed officials have tempered speculation about easing, prompting a more cautious approach among investors. This shift has disproportionately affected high-risk assets, including cryptocurrencies, leading to an increase in market anxiety.
Data from Santiment reveals a significant shift in social sentiment, which has turned sharply negative. The Crypto Fear & Greed Index has plunged to 15, marking a seven-month low and indicating extreme fear within the market.
Institutional Selling Pressure
Adding to the selling pressure are large-scale transactions by institutional investors. Reports indicate that firms such as BlackRock, Binance, and Wintermute have collectively sold more than $1 billion in Bitcoin. This rapid sell-off contributed to a swift 5% price drop within a matter of minutes. Furthermore, Bitcoin exchange-traded funds (ETFs) are experiencing significant outflows, with approximately $278 million withdrawn on November 12, contributing to total withdrawals exceeding $1 billion for the month.
This trend suggests a retreat by major investors, signaling a weakening of institutional demand for Bitcoin.
Despite the current challenges, Bitcoin remains near a critical support level of $98,000. Analysts suggest that if Bitcoin can maintain this position, a rebound towards $107,000 could be possible. Conversely, if the price falls below this key level, the cryptocurrency could face a deeper decline, with projections suggesting a potential drop to around $90,000.
As the market navigates these turbulent conditions, traders and investors will be closely monitoring developments to determine the next steps for Bitcoin and the broader cryptocurrency landscape.
