9 Reasons Bitcoin Crashed From $81K to $67K in Just 10 Days - CryptoPotato
Bitcoin has plunged from $81,000 to under $67,000 in just ten days, erasing nearly all gains since mid-August as multiple negative developments converged.
Bitcoin's dramatic $14,000 drop came not from a single event but from a cascade of negative developments that weakened underlying demand and liquidity in the cryptocurrency market. The massive collapse erased almost all gains charted since the mid-August rally, leaving investors questioning the market's direction in the face of mounting headwinds.
Political and Market Shocks
The initial catalyst was the US midterm election results, where Democrats swept both chambers of Congress. Bitcoin initially sold off toward the mid-$75,000s before briefly rebounding to $81,000. This recovery proved short-lived as fresh uncertainty emerged around regulation, fiscal policy, and tech spending during the second half of Trump's term.
Wall Street's tech-led crash compounded Bitcoin's woes. Just a day after the rally to $81,000, the Nasdaq plunged more than 5% in a single day, while the S&P 500 suffered its worst session in months. The S&P 500 lost roughly $3 billion in one session—more than the entire crypto market's capitalization—with Bitcoin following suit as equities tumbled.
ETF Outflows and Liquidity Crisis
Institutional demand for Bitcoin evaporated as spot BTC ETFs saw nearly $1.3 billion in withdrawals within a single week, marking their worst performance since June. This removal of a key marginal demand source coincided with increased selling pressure on the cryptocurrency.
CryptoQuant reported a sharp decline in underlying demand, with estimated 30-day spot BTC demand falling to around -280,000 BTC. Perpetual futures demand also turned negative, while Tether's market cap dropped by about $6.6 billion over 60 days, suggesting that dollar liquidity supporting earlier rallies has left the market.
Inflation Fears and Corporate Turmoil
Higher-than-expected October consumer inflation increased the probability of another Fed rate hike in December, making non-yielding assets like Bitcoin less attractive. Bitcoin broke through several technical support levels shortly after the inflation reading. Producer-price data added further pressure, with annual producer inflation remaining elevated despite less alarming monthly numbers.
Nvidia's leadership crisis sent shockwaves through markets after CEO Jensen Huang resigned, creating unprecedented uncertainty for the company that has become the centerpiece of the AI trade. This development spilled over into crypto markets, exacerbating Bitcoin's decline.
This matters well beyond NVDA and spills into crypto and BTC.
Index Exclusions and Leverage Spiral
MSCI's decision to exclude Strategy and Metaplanet from major global indexes forced passive funds to reduce or eliminate their MSTR positions, potentially harming Strategy's ability to raise capital and buy more Bitcoin. This could lead to further Bitcoin sales as funds rebalance their portfolios.
As Bitcoin dipped below key technical levels, leverage trades triggered a cascade of liquidations. CryptoPotato reported 24-hour liquidations exceeding $1 billion, with long positions accounting for the majority. This forced selling accelerated declines as lower prices triggered more liquidations, creating a self-reinforcing downward spiral.
Related
