Crypto Market Faces Major Downturn, BTC and Altcoins Plunge
- The cryptocurrency market lost over 20%, dropping from $4.4 trillion to $3.32 trillion.
- Bitcoin’s price fell sharply after reaching a record high of $126,200 in November.
- Spot ETFs saw $662M in outflows, reversing previous inflows and impacting market sentiment.
The cryptocurrency market has seen a sharp decline, erasing nearly all gains from early 2025. As of October 11, the market capitalization dropped by over 20%, from $4.4 trillion to $3.32 trillion. Bitcoin, which reached a peak of $126,200 on November 10, has now fallen below $100,000 earlier this week.
This downturn has triggered a surge in selling activity, resulting in large-scale liquidations. On October 11, the market saw a record $19.16 billion in liquidations, surpassing the $1.2 billion during the Covid-19 crisis and the $1.6 billion following the FTX collapse.
Bitcoin’s Rise and Fall: Market Volatility and ETF Influence
Bitcoin had been on an upward path, fueled by President Trump’s pro-crypto policies. Since his inauguration in January, Bitcoin has surged by 35%, which has been boosted by market activity during the December elections. However, recent corrections have resulted in a sharp decline, erasing many of the gains made for the entire year.
Despite the downturn, there has been a slight recovery in the market. After a loss in excess of 24% following the October liquidations, the market is now up 2.5% from its previous value. Still, the market is volatile, and Bitcoin has shown mixed performances.
Spot ETFs have experienced a steady outflow of capital since October. In November alone, U.S.-based Bitcoin ETFs had $662 million in net outflows. This is in sharp contrast to the $3.42 billion inflows witnessed in October, suggesting a reverse in investor sentiment has occurred.
In November, Ethereum saw $461 million in liquidations, reversing the $569 million gain from the previous month. This shift indicates that investors are moving away from riskier assets, intensifying the pressure on the crypto market.
Investor Fear Drives Crypto Market Volatility and Technical Strain
Investor sentiment has changed dramatically, as shown in the Fear and Greed Index. The index, which measures market sentiment, has fallen dramatically from 54 to 20. This is an indicator of a high level of fear, which suggests that investors are moving away from crypto assets due to an element of uncertainty and market volatility.
Major trading platforms have been under more pressure during this volatile period. Platforms such as Binance have experienced some technical issues with customer complaints of frozen order books and app lagging. These issues underpin the stress that the trading systems experience in times of extreme market volatility.
Related: Bitcoin Slips Below $100K, Triggering Billions in Liquidations
Bitcoin, though falling, has managed to trade above $102,000 as of press time. This week alone, the price of Bitcoin has dropped 7.53%, which has been one of the worst drops in a week since March. The drop has raised concerns about the direction of the market in the future.
Jeff Mei, Chief Operating Officer at BTSE crypto exchange, says a portion of the reason the crypto market has plunged in recent months is AI stocks. Mei noted that the sell-off in technology and artificial intelligence (AI) stocks might signal a decline in BTC. And if this trend persists, he suggested, Bitcoin would be below $100,000 and altcoins would lose even more.
The future of the crypto market remains uncertain. Analysts are closely looking at how artificial intelligence stocks and ETFs perform and the change in the sentiment of the investor. The next few weeks would play an important role in determining the direction of the cryptocurrency market, especially for Bitcoin, along with the major altcoins.
