[NEW YORK] Bitcoin has wiped out its summer rally, giving back gains made during Wall Street’s euphoric embrace and a surge in institutional buying.
The original cryptocurrency fell as much as 7.4 per cent to US$96,794 on Tuesday (Nov 4) in New York, the first time below US$100,000 since June. That’s down more than 20 per cent from a record high reached a month ago, a plunge consistent with a bear market in equities. Ether slipped as much as 15 per cent and several so-called altcoins posted similar declines, bringing losses for many of the less easily traded and liquid tokens to more than 50 per cent this year.
The turning point came in October, when a brutal wave of liquidations wiped out more billions in bullish positions. Since then, traders have stayed on the sidelines. Open interest in Bitcoin futures remains far below pre-crash levels, and even with funding costs turning favourable, few are willing to re-enter. The result: Bitcoin is up less than 10 per cent this year, lagging equities and once again falling short as a portfolio hedge.
“Bitcoin’s decline to the June lows reflects a market structure still grappling with the psychological overhang from October’s massive liquidation event, which has fundamentally altered how participants engage with the prevailing downtrend,” said Chris Newhouse, director of research at Ergonia, a firm specialising in decentralised finance.
Call it a low-conviction sell-off. The total liquidation figure – both long and short – for Tuesday stood at a modest US$1 billion, according to data compiled earlier by Coinglass. That’s a significant decline from the record of around US$19 billion wiped out on Oct 10.
In the meantime, options traders have built substantial hedges against further downside, with put contracts expiring in late November with the strike price of US$80,000 seeing the most demand, according to Coinbase-owned crypto exchange Deribit.
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Bitcon’s slide mirrors the reversal in high-flying tech stocks this week, with AI names such as Palantir and Nvidia tumbling amid fresh doubts about stretched valuations. Bitcoin, often seen as a proxy for speculative momentum, is once again falling in step with equity sentiment.
Cryptocurrencies face several other headwinds, including outflows from exchange-traded funds (ETFs) and concerns about potential selling by digital-asset treasury firms. A further retreat for Bitcoin would bring investor focus to the closely-watched US$100,000 level, which it only briefly breached in mid-June.
Both spot Bitcoin and Ether ETFs have posted outflows over the past month, signalling cooling investor demand after a strong run earlier this year. And while it’s still early in November, the trend so far is shaping up to be net negative, hinting at a pause in the sector’s momentum.
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“While the longer-term directional bias remains clearly bearish, the severity of October’s liquidations has prevented traders from maintaining sustained short positions with conviction, resulting in a market dominated by tactical, short-term momentum trades rather than committed directional exposure,” said Newhouse. BLOOMBERG
