"The sell-off was sharp but not critical": what will happen to bitcoin after the fall?

The total capitalization of the crypto market fell by more than 2% in just 24 hours, losing about $289 billion, due to the sharp decline in bitcoin and other cryptocurrencies, The Block reported. The value of bitcoin on Nov. 4 fell below $100,000 for the first time since June, losing about 7% in a 24-hour period. Relative to the record set a month ago, the largest cryptocurrency by capitalization has fallen in price by more than 20%.

According to CoinGlass data, over the past 24 hours, cryptocurrency exchanges have liquidated positions worth more than $1.7 billion, with $1.3 billion coming from long positions, The Block writes. Unlike the collapse in October, when the market collapsed due to forced sales and liquidations of leveraged positions, the current decline, according to analysts, is due to weakening investor confidence, Bloomberg writes. Over the past month, long-term holders have sold about 400,000 bitcoins - that's about $45 billion, which has upset the balance of the market, estimated the head of 10x Research Markus Thielen, quoted by the agency.

Additional pressure was exerted by outflows from bitcoin-ETFs - exchange-traded funds that allow investors to invest in bitcoins through traditional exchanges without directly buying the cryptocurrency. Bitcoin-ETFs recorded outflows of $578 million on Nov. 4, while Ethereum-ETFs lost $219 million.

Unlike the chain reaction of liquidations, which caused the collapse of bitcoin in October, the current decline is accompanied by gradual sales on the spot market. This indicates a change in market dynamics: if earlier volatility was usually intensified due to mass liquidations of futures positions, now the pressure is exerted by holders of cryptocurrency directly, Bloomberg explains.

Thielen warned that the sell-off could continue into next spring. During the 2021-2022 bear market, large investors sold more than a million bitcoins - he expects a similar scale now. "If the pace remains similar, we could see this for about another six months or so," he noted. At the same time, the head of 10x Research does not predict a precipitous fall, but allows for a further gradual decline.

"I am not a proponent of the market cycle theory, but the market will probably enter a consolidation phase and could go slightly below current levels. $85,000 is my maximum downside target level," Thielen said.

Co-founder of the cryptocurrency exchange BitMEX Arthur Hayes believes, on the contrary, that the bitcoin correction may be coming to an end. According to him, bitcoin price dynamics are closely linked to changes in dollar liquidity - both metrics have shown a similar decline since July, Coinspeaker writes. Hayes explained that the outflow of dollar liquidity is due to the U.S. Treasury Department replenishing its main account (TGA) after reaching an agreement on the government debt ceiling. But after the end of the US government shutdown, the Ministry of Finance will start spending from the TGA, which will lead to an infusion of liquidity into the markets, the analyst believes. In his opinion, this may provoke the growth of bitcoin and other risky assets.

In the longer term, Hayes expects the beginning of a "hidden cycle of quantitative easing". He argues that the Fed's Standing Repo Facility (SRF) actually acts as a covert liquidity channel, expanding the dollar monetary base. Historically, he says, bitcoin rises when the Fed's balance sheet increases, and this mechanism could support the cryptocurrency's exchange rate in the coming months.

Nick Pakrin, co-founder of analytics portal The Coin Bureau, believes that the long-term bullish outlook remains valid and bitcoin could reach $150,000 at the top of the current cycle, TheBlock writes. "I don't think this is the end of the bull market," Pakrin said. - But the volatility is getting stronger."

"Tuesday's sell-off was sharp but not critical. It's a withdrawal of shoulder, not faith. The system is now slimmer, more stable and less vulnerable to chain liquidations. But sentiment remains fragile and patience is the most valuable position in the market today," said Timothy Misir, head of research at analyst firm Block Research Network (BRN).

"We anticipate bitcoin's corrective phase will last a few more weeks," MarketWatch quoted Cathie Stockton, founder and managing partner of analyst firm Fairlead Strategies, as saying. However, bitcoin's long-term momentum remains positive: if the current correction ends, the price could reach $134,500, she suggested.

This article was AI-translated and verified by a human editor