Bitcoin is crashing again, and this time, traders fear the fall may get even worse. On Monday, the world’s biggest cryptocurrency slipped below $91,500, wiping out all the gains it had made this year. The drop has sent ripples across the market, with investors rushing to protect themselves from more damage.
In the options market, traders have turned heavily bearish. Many believe the selloff is nowhere near the end, especially as big-money buyers who once supported the rally are now stepping back.
Traders brace for a possible drop toward $80K
According to a Bloomberg report, demand for downside protection at $90,000, $85,000, and even $80,000 has increased. Options expiring later this month are seeing unusually high activity, according to data from Deribit, which is owned by Coinbase.
Just weeks ago, traders were betting high on Bitcoin. But now, more than $740 million worth of bearish contracts, bets that Bitcoin will fall further, have been bought for late November expiry. Bullish bets are nowhere close. Chris Newhouse, director of research at Ergonia, said, “The absence of conviction-based spot demand has become increasingly apparent as buyers who accumulated positions over the last six months now find themselves significantly underwater.”
Economic factors playing key roles
A sentiment index from CoinMarketCap, which tracks price momentum, volatility, and derivatives, shows that crypto investors are now firmly in a zone of “extreme fear.” And it’s not just crypto-specific worries. Larger economic factors are also playing key roles. Investors are waiting for Nvidia’s earnings on Wednesday, seen as a key indicator for tech and speculative assets.
Meanwhile, expectations around a possible US Federal Reserve rate cut in December are shifting again. The S&P 500 dropped more than 1%, hurting overall risk appetite. “I think the Fed and AI bubble talk are two major headwinds for crypto and risk assets heading into the end of the year,” said Adam McCarthy, a research analyst at Kaiko. “The AI risk is likely compounding and affecting risk sentiment in crypto, adding that to the chatter from FOMC officials, you’re looking at a sustained downtrend for Bitcoin.”
Speaking to Bloomberg, Adam McCarthy from Kaiko said, the situation clearly talks of an AI bubble and changing Fed expectations are both impacting crypto, and this pressure might continue through the end of the year. “The AI risk is likely compounding and affecting risk sentiment in crypto, adding that to the chatter from FOMC officials, you’re looking at a sustained downtrend for Bitcoin.”
Meanwhile, Ether is under even heavier pressure. It has slipped to $2,975, falling 24% since early October. Greg Magadini of Amberdata said Ether is especially vulnerable since many large treasury firms are already losing on their positions and cannot handle more downside.
Large crypto holders feel the heat
According to Bloomberg, the biggest setback has been delivered to companies known as digital-asset treasuries. These are the firms that purchased large amounts of crypto earlier this year, hoping the prices would keep rising. Several companies are under pressure to start selling so they can protect their balance sheets.
This has created a psychological burden across the market. There are many investors stuck in the same place. They are losing heavily, they don’t want to buy more, but they also aren’t ready to sell at a loss.
The market has been shaky since a massive liquidation wave in early October wiped out about $19 billion in digital assets. Open interest in crypto futures has fallen, especially for smaller tokens like Solana, where positioning has dropped by more than half, according to Coinglass.
“That riskoff tone spills into crypto markets, where sentiment remains fragile, the latest drawdown reflects broader macro jitters rather than structural flaws,” said Thomas Perfumo, global economist at crypto exchange Kraken, to Bloomberg.
