TL;DR
- The crypto market capitalization fell from $4.3 trillion to $3.4 trillion, a loss of nearly $1 trillion in one month.
- Institutional investors withdrew $1.15 billion from Bitcoin ETFs last week, signaling weakness.
- Volatility generated $2.1 billion in overnight liquidations, primarily affecting long positions.
This Wednesday, November 5, the cryptocurrency market suffered another sharp downturn that marked a market capitalization loss of nearly $1 trillion in the last month. The total market value plummeted from $4.3 trillion recorded in early October to $3.4 trillion at the time of this writing.
Major cryptocurrencies suffered significant losses. Bitcoin (BTC), down 8% for the week, tested the critical support level of $100,000. Meanwhile, Ethereum (ETH) fell to $3,300, plummeting 16% over the same period.
This drop triggered a wave of massive liquidations. $2.1 billion in liquidations were recorded overnight on Wednesday, affecting approximately 486,069 traders. Long (bullish) positions bore the brunt, accounting for nearly 79% of the total liquidated, or $1.67 billion.
Institutional investor sentiment appears to be behind the selling pressure. Last week, Bitcoin ETFs recorded outflows of $1.15 billion. This data is alarming, as these institutions were the key driver behind Bitcoin’s rally to $126,000 last month, and their current withdrawal signals a notable cooling of interest.
Solid Fundamentals or the Start of “Crypto-Winter”?
Despite the price carnage, some analysts remain optimistic. Eric Balchunas, a Bloomberg ETF analyst, maintains a positive outlook on Bitcoin’s ability to recover, citing solid annualized returns. The implication is that the current monthly crypto market drop is an overreaction driven by technical factors and excess leverage, not a fundamental problem.
However, this downward trajectory has revived fears of another so-called “crypto-winter,” a prolonged bearish period. While the crypto market’s sensitivity to technical changes can exaggerate movements, confidence is fragile.
Some forecasts, such as those by analyst Ali Martinez, warn that Ethereum could fall as low as $1,700 if it fails to break the $4,000 resistance. The monthly crypto market drop is testing investor resilience.
