Bitcoin is on its way to post its steepest monthly decline since the cryptocurrency sector's corporate collapse in 2022, with the digital asset tumbling approximately 25 per cent throughout November.
The world's largest cryptocurrency plunged by up to 6.4 per cent to $81,629 on Friday, whilst Ethereum dropped as much as 7.6 per cent to under $2,700.
The combined value of all digital currencies fell beneath $3trillion for the first time since April, based on data compiled by CoinGecko data.
This November marks Bitcoin's most severe single-month loss since June 2022, when the TerraUSD stablecoin collapse triggered widespread industry failures, ultimately leading to FTX's demise.
Bitcoin's value is plummeting
|GETTY / GOOGLE
Since early October, the cryptocurrency market has shed approximately $1.5trillion in value since reaching its peak in early October, following a devastating liquidation event on October 10 that eliminated $19billion in leveraged cryptocurrency positions.
Market sentiment indicators compiled by CoinGlass have plummeted to their lowest readings since the 2022 crisis, signalling "extreme fear" amongst traders.
The indicator registered at 94 following Donald Trump's presidential election victory roughly a year ago. Selling pressure accelerated over the past day, with an additional $2billion in leveraged positions eliminated, according to CoinGlass data.
Bitcoin traded near $82,900 early Friday morning ahead of the US market opening.
Crypto traders are 'extreme fear'
| ReutersInstitutional investors have shown marked reluctance to capitalise on the price weakness, with twelve US-listed Bitcoin exchange-traded funds recording net redemptions of $903million on Thursday, marking their second-highest single-day outflow since launching in January 2024.
Open interest in perpetual futures contracts has declined by 35 per cent from October's $94 billion peak.
"Sentiment across the board is incredibly poor. There appears to be a forced seller in the market and it is unclear how deep this goes," stated Pratik Kala, portfolio manager at Australian hedge fund Apollo Crypto.
Blockchain researcher Arkham Intelligence identified a cryptocurrency wallet associated with "Owen Gunden" that liquidated $1.3billion worth of Bitcoin between late October and Thursday, having held the assets since 2011.
Strategy Inc., led by Michael Saylor, faces mounting pressure as its share price declined five per cent yesterday, with the company's enterprise value to Bitcoin holdings ratio dropping to just above 1.2.
IG Australia analyst Tony Sycamore noted that markets might be "seeking to test Strategy's pain threshold," warning that further price declines approaching the firm's break-even level could prompt margin calls on its leveraged Bitcoin positions.
JPMorgan Chase analysts cautioned this week that Strategy Inc. risks exclusion from major indices including the MSCI USA and Nasdaq 100, with a decision anticipated by 15 January.
Meanwhile, firms that emulated Saylor's Bitcoin accumulation approach, including Sequans Communications, ETHZilla and FG Nexus, have begun liquidating portions of their cryptocurrency holdings to finance share repurchases intended to bolster their falling stock valuations.
Nvidia reached a record $5trillion valuation in late October | GETTYOutside the crypto market, US equities bounced back amid wider stock volatility after New York Federal Reserve President John Williams hinted the central bank could slash interest rates next month.
Following his comments, the Dow Jones gained 220 points, or 0.5 per cent, while the S&P 500 and Nasdaq both gained 0.3 per cent.
Concerns over a potential AI market bubble have arisen in recent months despite "Magnificent 7" companies like Nvidia posting record earnings.
The AI microchip firm announced revenue for the three months to October jumped 62 per cent to $57billion, however this did not stop the Nasdaq falling into red
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