Bitcoin’s current decline, now over 30% from its October all-time high, raises an important question: have we officially entered a bear market? A compelling argument can undoubtedly be presented. November appears poised to mark bitcoin’s most challenging month since the downturn in 2022. And the fourth quarter, typically seen as crypto’s dependable sugar high, is beginning to resemble a cold shower instead. Friday’s washout reflected the sentiment. Almost $2 billion in leveraged positions were liquidated as bitcoin dipped to approximately $82,000, causing the total cryptocurrency market cap to fall below $3 trillion for the first time since the spring. The early months of 2025 showcased a period marked by unwavering inflows and a prevailing sense of institutional certainty. However, the last fortnight has starkly illustrated just how swiftly sentiment can dissipate.
The ETF data reflects a consistent narrative. On Thursday, U.S. spot bitcoin ETFs experienced net outflows of $903 million, marking their second-largest withdrawal since inception and the most significant since the selloff triggered by February’s tariff shock. The fundamental trend is quite straightforward: seasoned investors, enjoying substantial profits, are liquidating their positions. According to a analysts, the recent selloff is clearing out accumulated leverage at a time when the Federal Reserve’s ambiguity regarding additional rate cuts has dampened the market’s risk appetite. Demand indicators are showing signs of cooling off. This week, researchers stated, “we are highly likely to have seen most of this cycle’s demand wave pass.” ETF accumulation has decelerated to one of its most sluggish rates since the introduction of these products. The crypto treasury cohort, poised to be one of the defining new buyers of 2025, has significantly reduced its bitcoin purchases as their market caps have plummeted in recent months, dropping from a peak of $176 billion to approximately $99 billion. Even Strategy, recognized as the most consistent buyer, has had to scale back as its stock premium has deflated toward NAV.
The recent developments are a direct consequence of the mass liquidation that occurred on October 10, raising pressing concerns regarding the resilience of crypto’s market infrastructure under institutional-level pressure. So, what’s the current status? It seems to be trending downward. Alex Thorn and Beimnet Abebe have highlighted the classic phenomenon of reflexivity in action: declining prices lead to increased selling, which in turn causes further price declines. With no clear catalyst in sight, the most likely trajectory appears to be downward for the time being.
However, gaining some perspective is beneficial. Bitcoin might have retreated from its peak, yet it remains over 20% higher compared to its position last November. It has become a widely accepted asset, acknowledged by leading banks and institutions. Advisors are moving away from their cautious “toe-in-the-water” strategies and are now incorporating it as a strategic allocation in client portfolios. The regulatory landscape is more favorable than it has ever been. A new wave of crypto ETFs is broadening market access. In other words, we could be experiencing a significant correction phase, and this time the market isn’t gazing into the void.