Bitcoin drops toward $81,000 in worst month since 2022
What's the story
Bitcoin, the world's largest cryptocurrency, is heading toward its worst monthly performance since a series of corporate collapses rocked the crypto sector in 2022. The digital currency plunged as much as 6.4% to $81,629 on Friday. Ether, the second-largest cryptocurrency by market cap, also witnessed a decline of up to 7.6%, falling below $2,700. Other smaller tokens also followed suit with similar declines.
Market impact
Bitcoin's value has dropped by 25% in November alone
Bitcoin has lost nearly 25% of its value in November, the biggest monthly decline since June 2022. The fall is similar to the aftermath of Do Kwon's TerraUSD stablecoin project collapse in May 2022, which triggered a chain reaction of corporate failures and led to Sam Bankman-Fried's FTX exchange going bust. Despite a pro-crypto White House under President Donald Trump and rising institutional adoption, Bitcoin has fallen over 30% from its record high in early October.
Market challenges
Liquidations and market value drop contribute to Bitcoin's decline
The decline in Bitcoin's value is also attributed to a massive wave of liquidations on October 10, which wiped out $19 billion in leveraged token bets. This event led to a loss of nearly $1.5 trillion from the total market value of cryptocurrencies. In the last 24 hours alone, another $2 billion worth of leveraged positions were liquidated, according to CoinGlass data.
Market sentiment
Broader market conditions and forced selling impact Bitcoin
The broader market conditions haven't helped Bitcoin's case either. US stocks, which had previously gained on renewed enthusiasm for artificial intelligence after positive earnings from NVIDIA, lost their gains amid concerns over stretched valuations and uncertainty over a Federal Reserve rate cut in December. Pratik Kala, portfolio manager at Australia's Apollo Crypto hedge fund, said "sentiment across the board is incredibly poor" with a forced seller in the market.
Investor sentiment
Crypto investor sentiment index hits lowest level since 2022
The crypto investor sentiment index, which measures factors like volatility, momentum and demand, is at its lowest since the 2022 meltdown. The index compiled by CoinGlass currently shows "extreme fear" among traders, and it was notably low just after Trump's presidential election victory a little over a year ago.