Written by: White55, Mars Finance
On November 4th, Beijing time, the cryptocurrency market once again faced a “Black Monday.” The price of Bitcoin fell below the $107,000 mark, dipping to around $105,300 at one point, with a daily decline of over 4%. And this is just the tip of the iceberg of the entire market's grim situation.
Ethereum plummeted by 9%, falling below the key support level of $3600, down 25% from the August high; major altcoins such as Solana, BNB, and Dogecoin saw declines of up to 8%-11%, with some tokens even dropping back to the lows during the flash crash in October.
The broader altcoin market is showing weaker performance, with the MarketVector index tracking the performance of the last 50 of the top 100 digital assets declining for the third consecutive trading day, falling by as much as 8.8%. This index has dropped by approximately 60% since the beginning of this year.
Market Catastrophe: $1.2 billion liquidated across the network, over 340,000 investors faced bloodbath.
The direct result of this crash is a massive slaughter.
Coinglass data shows that in the past 24 hours, the total liquidation amount in the cryptocurrency market reached 1.278 billion USD, with over 340,000 people liquidated.
A closer look at these data is even more shocking: among them, long positions liquidated amounted to 1.162 billion USD, accounting for over 90%, while short positions liquidated were only 116 million USD.
This data indicates that the vast majority of investors bet on the market going up, only to be caught off guard by such a severe correction. The largest single liquidation occurred in the BTC-USDT trading pair on the HTX exchange, worth as much as $33.9587 million.
Behind this massive liquidation, it could be the instantaneous evaporation of wealth for an institutional investor or a super whale. Panic spreads like a plague.
The pressure on the funding side is also becoming apparent: the perpetual contract funding rate has been continuously weakening since mid-October, with several exchanges turning negative, meaning that short sellers need to pay for their positions, reflecting an increasing bearish sentiment in the market.
Deribit data shows that the open interest for Ethereum put options expiring on November 28 has significantly increased, particularly concentrated at strike prices below $3700, $3500, and $3000, indicating that more traders are betting on further declines.
The main culprits behind the scenes: a dual blow from slowing institutional demand and black swan events.
Why did the market suddenly “flash crash”? There are multiple factors intertwined behind it.
The most direct trigger was a hacker attack incident. The decentralized finance protocol Balancer, based on Ethereum, exposed a security vulnerability, resulting in losses of over 100 million dollars.
This is the latest in a series of bearish events over the past few weeks that have left cryptocurrency investors on edge.
However, the deeper reason lies in the fact that institutional investors are quietly retreating. Charles Edwards, founder of Capriole Investments, pointed out that the demand for Bitcoin from large institutions has slowed down, falling below the output rate of new coins for the first time in seven months.
This data indicates that one of the key forces that previously drove the market up may be weakening. On-chain data also confirms this trend.
A recent report from the digital asset management company CoinShares shows that last week, U.S. Bitcoin exchange-traded funds (ETFs) became a major area for institutional capital outflows, with redemptions amounting to $946 million.
Among them, the iShares Bitcoin Trust (IBIT) experienced an outflow of approximately $400 million in a single week, making it the largest outflow among the 11 spot Bitcoin funds currently trading. Meanwhile, some wallets that had been inactive for a long time have been activated. “These tokens have started to move, potentially re-entering the market and providing some selling pressure, as investors are taking profits,” said CoinShares digital asset analyst Matthew Kimmell.
The Aftermath of October's Flash Crash: The Market is in a “Hangover Phase”
Three weeks have passed since the severe fluctuation in October that wiped out approximately $19 billion in long positions, but its “aftereffects” are still ongoing.
Jordi Alexander, the CEO of the cryptocurrency trading and market-making firm Selini Capital, stated that the crypto market is currently in a “hangover phase” after the October liquidation shock. He believes that it will take time to rebuild the destroyed capital base, and investor sentiment remains cautious.
In Alexander's view, “the market must first prove that a convincing price bottom is about to form before it can attempt to break upwards again.” Investors will not easily enter the market until there are clear signals indicating that the price has found support.
This widespread cautious mentality has led to a continuous contraction of market liquidity, while the low liquidity during the Asian trading session has further amplified volatility. With the fluctuations in market liquidity and demand, large asset management institutions are actively managing their cryptocurrency exposure.
The macro level is also not optimistic. Although the Federal Reserve has implemented a second interest rate cut, Chairman Powell warned that another rate cut in December is “not a foregone conclusion.” This hawkish statement, combined with the absence of key economic data releases, has left investors in a wait-and-see mode.
The End of the Bull Market? The Answers Given by Historical Trends and Market Signals
In the face of such a brutal adjustment, the voices declaring that the “bull market has ended” are incessant in the market. However, the reality may be far more complex than the surface phenomena.
The traditional four-year cycle model may have changed.
Writer and investor Jason Williams pointed out on social media: “The top 100 Bitcoin reserve companies hold nearly 1 million Bitcoins. This is why the four-year cycle of Bitcoin has come to an end.”
Matthew Hougan, Chief Investment Officer of Bitwise Asset Management, shares a similar view, believing that the traditional halving cycle model may be breaking down.
The author believes that the key technical indicators of Bitcoin have not completely deteriorated. Although it has fallen below the 200-day moving average, it has not fallen below the 365-day moving average and has still risen by about 14% since last December.
Moreover, from a longer-term perspective, each bottom of Bitcoin has formed through consolidation between the 200-day moving average and the 365-day moving average, which means that the upward trend since 2022—creating higher peaks and higher troughs—has not been broken.
The market sentiment indicators are still far from the levels that historically mark significant tops in cryptocurrency. A true market top is usually accompanied by extreme euphoria and FOMO, while current investors are showing more caution and hesitation.
On-chain data also provides some positive signals.
Despite long-term holders selling nearly 400,000 Bitcoins worth over $40 billion in the past month, the net inflow for Bitcoin spot ETFs during the same period was about $2.5 billion, indicating that there is still considerable buying interest in the market.
The uncertainty of this capital distribution reminds the market of the previous structural adjustment phase— for example, after the “open interest clean-up,” Bitcoin recorded a strong rebound cycle of 75%.
Future path: short-term pressure does not change the long-term trend
Regarding the market outlook, analysts point out that if the support range of $106,600 is lost, Bitcoin may extend down to the range of $98,000 to $100,000. This area could become a new buying zone, and once the market stabilizes, a technical rebound is expected.
On the funding side, Bitcoin Dominance continues to rise, indicating that funds are flowing back from altcoins to Bitcoin. Although it still appears weak in the short term, technical indicators such as RSI and Bollinger Bands suggest that the market is in a compression phase, which may be a prelude to the next round of significant volatility.
Historical seasonal patterns also provide a glimmer of hope. Data shows that Bitcoin's average increase in November exceeds 40%, and this historical pattern may serve as an important reference for the market to stabilize after a decline.
Looking back at this market crash, the Ethereum-based DeFi protocol Balancer suffered a hacker attack, with losses potentially exceeding $100 million, which undoubtedly was the last straw that broke the market's confidence.
However, at the same time, some long-dormant Bitcoin wallets have been activated, and tokens are re-entering the market, creating selling pressure; institutional demand for Bitcoin has fallen below the rate of new coin production for the first time in seven months—these factors have collectively orchestrated this tragedy.
The market always nurtures hope in despair.
As of the time of writing, Bitcoin has once again risen above $106,000, and Ethereum has also returned above $3,600. A brief rebound may not indicate much, but it does suggest that bullish forces are quietly accumulating. For market participants, staying calm and rational is more important in the current environment than ever before.
