Bitcoin plunges 33% as deleveraging, tech rout and Fed hawkishness trigger sell-off
The flagship cryptocurrency dropped to seven-month lows near $81,636 as over $1 trillion wiped from crypto markets amid forced liquidations and shifting risk sentiment.
Dramatic price collapse accelerates
Over the past several weeks, Bitcoin's price has plunged dramatically – by around 33% - reflecting a broader meltdown in cryptocurrency markets and a retreat from risk-assets.
The world's largest cryptocurrency recently dropped below $90,000.00 and reached a seven-month low near $81,636.00 in Asian trading, erasing months of gains.
This sharp decline has caught many investors off-guard, particularly those who had positioned for continued strength following the rally to above $126,000.00 in early October.
The speed and magnitude of the fall demonstrates how quickly sentiment can shift in cryptocurrency markets when multiple negative factors converge.
Massive deleveraging phase sweeps markets
The crypto market is undergoing a major deleveraging phase. More than $1 trillion has been erased from global crypto market capitalisation in the past seven weeks, as speculative positions unwind and over-extended traders are forced to liquidate.
The size of liquidations is eye-watering: one estimate cites around $19 billion in crypto liquidated on a single day in early October, contributing to a chain reaction of selling.
This liquidation cascade has been amplified by leveraged positions facing margin calls, forcing traders to sell regardless of price to meet obligations.
The deleveraging reflects the excessive speculation that had built up during the rally phase, with many traders using borrowed money to increase their cryptocurrency exposure.
Fed policy shift undermines risk appetite
Macro-economic headwinds are taking centre stage. Investor sentiment has shifted into risk-off mode as the renewed hawkish tone from the Federal Reserve (Fed) has reduced expectations for imminent rate cuts.
This has weighed hard on risk assets, including Bitcoin, which benefits from lower interest rates reducing the opportunity cost of holding non-yielding assets.
For example, options-market data now indicate a roughly 50% chance that Bitcoin will end the year below $90,000.00, showing bears are firmly in control of near-term expectations.
The shift in Fed policy expectations represents a fundamental change in the macro backdrop that had previously supported cryptocurrency valuations.
Technical breakdown amplifies selling
Technical and market-structure issues are amplifying the decline. Bitcoin has broken below key support levels and fallen out of favour with trend-following investors.
This increases the chances of cascading stops and further losses as technical selling compounds fundamental concerns.
Liquidity is thinner, and when a large asset like Bitcoin moves sharply without strong buyer-demand, the declines can accelerate as sellers struggle to find willing counterparties
The technical breakdown has created a self-reinforcing cycle where price weakness triggers additional selling from algorithmic and momentum-based strategies.
Bitcoin technical analysis
From a chart-analysis standpoint, Bitcoin’s drop below the mid-May to June lows and the early-November trough at $100,762.58–$98,330.30 represents a clear bearish break.
The decline has already pushed the price into the $80,000.00 area, underscoring the severity of the move, since a weekly chart close below its October 2023-to-November 2025 uptrend line at $85,628.00 on Friday 21 November would indicate a break of the uptrend.
Bitcoin weekly candlestick chart
The Bitcoin price is on track for its fourth straight week of declines, the past two of which amount to around 20%, with the March-to-July 2024 highs and March-to-April 2025 lows at $76,702.93-to-$70,040.75 representing a possible major support zone where it may stabilise
For the technical picture to become less bearish a rise and daily chart close above the 20 November high at $93,068.00 would need to occur.
Bitcoin daily candlestick chart
The speed of the current sell-off - Bitcoin has lost 33% in just seven weeks - indicates that downside momentum is firmly in control, though.
Technical indicators and broader market structure signal that a meaningful recovery will require a decisive improvement either in fundamental drivers or overall risk sentiment.
The former support band at $100,762.58–$98,330.30 has now flipped to become a major resistance zone - one that Bitcoin would need to reclaim on a weekly closing basis to stabilise its longer term outlook.
For bullish control to return, the price would need to break above the 11 November peak at $107,461.75. Without such a strong reversal, the medium-term technical trend is likely to remain firmly bearish.
Correlation with risk assets intensifies
Broader market correlations are worsening the weakness. Crypto is behaving more like a "risk-on" asset and is being sold alongside high-growth tech stocks and other speculative instruments.
In other words, Bitcoin's fall isn't just about its own fundamentals, it's also about shifting global investor risk appetite and portfolio rebalancing.
Finally, the backdrop of a bull run that reached new highs in early October above $126,000.00 invites profit-taking and correction risk after such strong gains.
Some investors are choosing to lock in profits, and this may be magnified by traders who were highly leveraged and now face forced selling.
Challenging near-term outlook
What does this mean going forward? The combination of macro risk, liquidity stress and technical breakdowns suggests the near-term outlook remains challenging for Bitcoin.
Unless a new catalyst emerges - for example, a surprise Fed rate-cut, major institutional buying, or a restoration of risk-appetite - the price could test lower levels before stabilising.
Some analysts even view current levels as a "value zone", which may attract bargain-hunters looking to accumulate at more attractive prices.
But the burden of proof lies with the bulls to demonstrate that fundamental support exists at these levels.
Multiple pressure layers converge
In summary, Bitcoin is falling sharply not because of one isolated issue but because multiple layers of pressure have converged simultaneously.
High leverage trades being unwound, fading macro tailwinds, weak technical structure and reduced liquidity all combine to create challenging conditions.
Until those pressures ease, Bitcoin is likely to remain vulnerable to further downside or at minimum extended consolidation at lower levels.
The recovery will likely require both improved macro conditions and restoration of market confidence before sustainable upward momentum can resume.
Investing considerations during volatility
For investors navigating Bitcoin's current volatility, the sharp decline creates both risks and potential opportunities depending on time horizon and risk tolerance.
- Research the macro factors driving Bitcoin's decline and assess whether current levels present opportunity or signal further downside risks.
- Consider your risk tolerance for cryptocurrency volatility and whether conditions support new positions or warrant defensive positioning.
- Implement strict position sizing and stop-losses given heightened volatility and uncertain near-term direction.
The current environment requires careful risk management, as the multiple pressure factors suggest further volatility ahead regardless of ultimate direction.
Investing in Bitcoin carries significant risk because it operates outside traditional regulatory frameworks, leaving investors with no financial protections if something goes wrong. Investors may lose all of their money.
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