Bitcoin Plunge Below $90,000 Fuels Market Turmoil, ETF Outflows Intensify
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The world’s leading cryptocurrency, Bitcoin, briefly dipped below $90,000 on Tuesday, exacerbating existing volatility across global financial markets and triggering billions in outflows from related investment products. The decline raises concerns about a potential cascading sell-off as macroeconomic headwinds and waning investor confidence weigh on the digital asset landscape.
The cryptocurrency experienced intraday losses of up to 2.8 percent before partially recovering to around $91,400 on Tuesday afternoon. Since mid-October, Bitcoin has shed approximately $330 to $340 billion in market capitalization, a meaningful reversal following a peak above $126,000 in October.
The downturn has rippled through broader markets, contributing to a slump in global equities. Stock indices in Europe and Asia fell by more than one percent, while U.S. stock futures signaled further losses.
Macroeconomic Uncertainty Drives Risk Aversion
The price slide coincides with a reassessment of the U.S. Federal Reserve’s monetary policy. The likelihood of a rate cut in December has fallen to below 50 percent, according to Bloomberg, increasing uncertainty and dampening investor appetite for riskier assets.
“With the probability of a fed rate cut in December currently under 50%, crypto markets are continuing their downward trend after losing the key $100,000 mark in BTC,” noted an analyst at Monarq Asset Management.
Risk of a Cross-Market Sales Spiral
Market observers are warning of a potential feedback loop, where leveraged investors may be forced to sell assets across various sectors to meet margin calls. This could amplify selling pressure throughout the financial system. According to one expert at Fidelity International, recent declines across asset classes are partially attributable to spillover effects from the crypto market.
Billions Exit Bitcoin ETFs
A key driver of the recent weakness is substantial capital flight from Bitcoin exchange-traded funds (ETFs). The twelve spot ETFs specializing in Bitcoin recorded net outflows of approximately $2.8 billion in November. This contrasts sharply with the inflows experienced during the rally following Donald Trump’s election in November of the previous year, which added tens of billions of dollars to these funds.
despite the recent outflows, these ETFs had accumulated over $25 billion in assets and held a total of around $169 billion throughout the year.
Liquidation pressure Mounts
Demand from retail investors and “dip buyers” has reportedly waned. The market is still recovering from over $19 billion in liquidations that occurred in early October, wiping out more than $1 trillion in market value.In the last 24 hours, over $600 million in long positions were liquidated, according to Coinglass.
Why did this happen? Bitcoin’s price decline stemmed from a combination of factors: increasing macroeconomic uncertainty, specifically regarding the U.S. Federal Reserve’s monetary policy, and significant outflows from Bitcoin ETFs. Waning investor confidence and reduced demand from retail investors also contributed.
Who is affected? The decline impacts a wide range of stakeholders. Bitcoin holders experienced losses, and the downturn rippled through
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