BTC Markets analyst Rachael Lucas has described the month as “a perfect storm”, with spot ETFs turning from net buyers to net sellers and leveraged trades getting wiped out as prices cracked key support levels.
“We’ve seen heavy outflows from spot Bitcoin ETFs, a leverage clean-up in futures, and a broader risk-off wobble in tech that spilled into crypto.
“ETFs flipped from soaking up supply to selling, [try to] think billions out the door in November, while leveraged positions got auto liquidated as prices broke support, which accelerates every leg lower,” Lucas said.
“Add tech’s pullback and higher for longer rate jitters, and you’ve got the drawdown you’re looking at.”
Since early October’s peak of around US$126,000 (AU$190,000), Bitcoin’s slide briefly threatened the US$80,000 (AU$125,000) level, delivering what Lucas called “the worst monthly vibe since 2022.”
Lucas said crypto crashes typically follow predictable mechanical patterns rather than mysterious market forces.
“When traders pile into leverage, even a tiny dip can spark margin calls and forced selling, and in thin markets that snowballs fast,” she said.
“Add ETF redemptions and shrinking stablecoin supply, and suddenly the cash that props up prices vanishes. Then throw in macro curveballs, hawkish rate chatter, growth fears, policy shocks, and risk appetite flips overnight.”
She added that large holders can accelerate price swings when liquidity is fragile.
“Whales can start moves, amplify moves, or time moves to trigger liquidation bands,” she said, pointing to reports of pre-positioned shorts ahead of tariff headlines that aligned with a major liquidation day.
The self-reinforcing nature of crypto markets also amplified the cycle, according to Lucas.
“In bulls, social feeds influence the FOMO trade,” she said. “In bears, the same speed works in reverse: negative headlines and fear indices push herd behaviour, stops and margin triggers cascade, and each drop invites more forced selling.”
Despite Bitcoin’s fixed supply of 21 million coins – with around 95 per cent already mined – Lucas emphasised that long-term price stability depends entirely on demand. While Bitcoin has grown into one of the world’s largest assets, recently reaching a US$1.77 trillion market cap, she said that its youth means volatility is still part of the asset class’s DNA.
During crashes, investor psychology remained the most reliable driver of short-term behaviour.
“Two words: loss aversion,” Lucas said. “Losses hurt about 2–3x more than equivalent gains feel good, so human psychology will switch to fight or flight… In crypto, 24/7 markets and leverage amplify those reactions.”
On whether Bitcoin’s slump presents a buying opportunity, Lucas referenced previous dips.
“In prior cycles, 20-30 per cent pullbacks inside bull markets were common and were often followed by recoveries once leverage flushed and flows stabilised,” she said.
Lucas pointed to one of the sharpest 30-day open-interest drops of the cycle, typically associated with durable bottoms.
“Historically, when BTC gets this low after a leverage flush and ETF outflows, the next chapters have often included choppy basing, then recovery,” she said. “A ‘buy the fear’ move has precedent; just pair it with risk controls.”
“Bitcoin’s slide isn’t a mystery, it’s ETFs selling, leverage unwinding, and tech going risk off. History says big flushes set the stage for the next leg if demand comes back.”
The CMC Crypto Fear & Greed Index recently collapsed to 12 and Zerocap’s Emir Ibrahim said this signals deep extreme fear and the lowest reading of the year, marking a complete reset from the euphoria seen in late 2024.
“With liquidity thinning into Thanksgiving and fear peaking, the market is primed for stabilisation if US tech steadies. From a Zerocap lens, our view is if the credit wobble persists, crypto remains vulnerable, but the sentiment washout now gives the next move more asymmetry than before,” he said.
