Bitcoin is heading for its worst monthly performance since the cryptocurrency crash in 2022. The biggest cryptocurrency dropped as much as 7.6% to $80,553 on Friday before recovering some losses, Bloomberg reported. Ethereum, the second-largest crypto, fell nearly 9% to below $2,700. Several smaller tokens also dropped. The total value of all cryptocurrencies fell below $3 trillion, a level not seen since April, according to CoinGecko.
Why is Bitcoin falling?
Bitcoin often moves in step with tech stocks. “When tech sneezes, it’s natural to expect Bitcoin to catch a cold,” said Nic Puckrin, investment analyst and co-founder of The Coin Bureau in a statement to CBS.
Some investors are also selling Bitcoin to cover margin calls. Platforms like Coinbase allow traders to use “perpetual futures,” which offer up to 10-to-1 leverage. This means small price changes can lead to large gains or losses. In such cases, if a leveraged trade moves against the investor and they cannot meet margin requirements, the platform may automatically sell the position. This will eventually cause selling and downward pressure on the price.
Nigel Green, CEO of deVere Group, explained, “When traders borrow heavily to magnify positions, any reversal triggers liquidations that accelerate the move.”
However, several Crypto experts think that large declines in Bitcoin’s price are not unusual, and the cryptocurrency has historically bounced back after such falls. Brian Vieten, research analyst at Siebert Financial, told CBS, Bitcoin has experienced around five corrections of 20–30% or more during past bull markets. He added that current challenges could be “temporary headwinds” and that some investors may see lower prices as a buying opportunity.
Bitcoin faces worth month since Crypto collapse in 2022
Bitcoin has lost about a quarter of its value in November. This is the largest single-month decline since June 2022. That year, the collapse of the TerraUSD stablecoin led to a series of corporate failures, ending with the collapse of FTX, a major crypto exchange run by Sam Bankman-Fried.
In the present, despite strong backing from US President Donald Trump and increasing adoption by institutions, Bitcoin has dropped over 30% since reaching a record high in early October. The fall followed a major liquidation on October 10 that wiped out $19 billion in leveraged bets. This erased roughly $1.5 trillion from the total crypto market.
Chris Newhouse, director of research at decentralised finance firm Ergonia, told Bloomberg, forced liquidations and ETF selling have left the crypto market fragile. Any attempt to stabilise prices faces immediate selling pressure from multiple sources. In the past 24 hours alone, $2 billion in leveraged positions were liquidated, according to CoinGlass.
Twelve US-listed Bitcoin ETFs saw $903 million in net outflows on Thursday, their second-largest single-day redemption since launching in January 2024. Open interest in perpetual futures fell 35% from its October peak of $94 billion, according to Bloomberg.
Bitcoin fell to its 11th consecutive lower low on Friday, the longest losing streak since 2010. Bohan Jiang, senior derivatives trader at FalconX, said many crypto investors have become extremely cautious. “There has been very little risk-taking since the October events. Most are just de-risking across major coins and altcoins, trying to protect their positions for the year,” he explained.
