Bitcoin crashes over 21% in November amid forced liquidations
What's the story
Bitcoin, the world's most traded cryptocurrency, has witnessed its worst monthly decline in over three years. The digital asset has lost more than 21% this month, its steepest fall since June 2022. The decline has been largely attributed to forced liquidations and a risk-off sentiment across speculative assets. Major altcoins have also followed suit, contributing to the downturn in the wider crypto market.
Market impact
Bitcoin's value plummets by 33% in over a month
Bitcoin's value has dropped from nearly $126,000 in early October to below $81,000 by late November. This marks a staggering 33% decline in just over a month. The selloff was further exacerbated by heavy redemptions from Bitcoin exchange-traded funds (ETFs), with BlackRock's iShares Bitcoin Trust (IBIT) taking the brunt of it. IBIT saw nearly $3 billion in net outflows this month alone, including a record single-day redemption of $523 million.
ETF pressure
Ether ETFs saw outflows of around $1.79 billion
In total, spot Bitcoin ETFs lost nearly $3 billion while Ether ETFs saw outflows of around $1.79 billion. Meanwhile, some niche funds like those tracking Solana managed to attract inflows. The outflows coincided with Bitcoin's fall below key technical levels and a deteriorating macroeconomic outlook amid fading hopes of near-term Federal Reserve rate cuts and rising institutional short-selling.
Market fallout
Liquidation wave triggers forced selling, market cap erosion
The current turmoil can be traced back to a massive liquidation wave on October 10 that wiped out nearly $19 billion in leveraged bets. This triggered heavy forced selling well into November. A major Bitcoin whale further fueled the decline by offloading some $1.3 billion worth of holdings in late October and selling further positions early November.
Sentiment shift
Macroeconomic factors and regulatory uncertainty impact investor sentiment
Investor sentiment was also hit by weak macroeconomic data, including disappointing jobs numbers and fading hopes of Federal Reserve rate cuts. Regulatory uncertainty further weighed heavily on the market with the much-anticipated Clarity Act and a bill to prevent the Federal Reserve from issuing a central bank digital currency stalling in Congress. Despite this, some analysts urged investors to view the correction within Bitcoin's inherent volatility rather than as a structural breakdown.