Bitcoin heads for worst month since 2022 crypto market crash
Kyiv • UNN
Bitcoin lost about 23% of its value in November, which is the largest monthly drop since June 2022. This drop follows a wave of liquidations on October 10, which wiped out $19 billion in leveraged tokens.
Bitcoin is preparing for its worst monthly price drop since a series of corporate bankruptcies hit the crypto industry in 2022, Bloomberg reports, according to UNN.
Details
According to Bloomberg data, the largest cryptocurrency fell 6.4% to $81,629 on Friday before fully recovering its losses. At 7:42 a.m. London time (9:42 a.m. Kyiv time), it was trading at $84,166. Ether fell 7.6% to below $2,700.
According to Bloomberg, Bitcoin lost about 23% of its value in November, its largest monthly drop since June 2022. The collapse of Do Kwon's TerraUSD stablecoin project in May of that year triggered a chain of corporate bankruptcies, culminating in the collapse of Sam Bankman-Fried's FTX exchange.
Despite pro-cryptocurrency support from the White House under US President Donald Trump and a surge in institutional adoption, Bitcoin has fallen more than 30% from its record high set in early October.
This decline followed a devastating wave of liquidations on October 10, which wiped out $19 billion in leveraged tokens and, in turn, reduced the aggregate market value of all cryptocurrencies by approximately $1.5 trillion.
Selling pressure has only intensified in the last 24 hours, with another $2 billion in leveraged positions liquidated, according to CoinGlass.
Institutional entities appear to be in no hurry to buy the dip. A group of 12 US-listed Bitcoin exchange-traded funds faced net outflows of $903 million on Thursday, the second-largest single-day redemption since their debut in January 2024. Open interest in perpetual futures has fallen 35% from an October peak of $94 billion.
The overall market environment has done little to support growth. US stocks, which had been rising amid renewed enthusiasm for artificial intelligence following Nvidia Corp.'s positive earnings report, lost ground amid concerns about overvalued stocks and doubts about a Federal Reserve rate cut in December.
"Overall sentiment is too negative. There seems to be forced demand for stocks in the market, and it's unclear how deep it is," said Pratik Kala, who manages the portfolio of Australian hedge fund Apollo Crypto.
Tony Sycamore, an analyst at IG Australia, noted in his memo that the market "may also be trying to test Strategy's pain threshold," referring to the company run by Michael Saylor, which held Bitcoin in its assets. This is important because a further decline in the company to its break-even point could lead to a margin call on its borrowed funds, he added. Strategy Inc. shares closed down 5% on Thursday.
Recall
Bitcoin has long ceased to be an exclusively speculative asset and increasingly reacts to global political and financial signals, noted fintech expert and co-founder of Concord Fintech Solutions Olena Sosedka. According to Olena Sosedka, after updating historical highs and a sharp rise to record levels, the digital asset market entered a phase of "overheating."
"Bitcoin grew too fast. Such phases always end with a correction. The only question here is its depth and rapidity," explained the fintech expert.
Moreover, when the price of cryptocurrency begins to fall, massive liquidations of margin positions further accelerate the decline, creating a "domino effect."
According to the fintech expert's assessment, after the fall, the market may enter a consolidation phase – stabilization within a certain range with increased volatility. Most likely, in the next six months, the value of Bitcoin will fluctuate within $100-140 thousand. However, it is worth remembering that the volatility of the crypto market will depend on external factors.
Olena Sosedka notes that three main scenarios for the development of events in the digital asset market are possible.
The baseline scenario involves consolidation, where the market "digests" the correction, and Bitcoin holds within a wide trading corridor. In a positive scenario, there will be a resumption of crypto value growth. Such a development is possible if the dollar weakens, central banks pursue favorable policies, and large institutional inflows into Bitcoin resume. This could lead to the coin's value rising even to $150-200 thousand.
The negative scenario implies an even deeper correction. In the event of a sharp tightening of regulation or a global shift of investors to risk-free assets, Bitcoin, according to Olena Sosedka, could fall even lower and remain below $100 thousand.