The cryptocurrency market suffered another sharp downturn on Wednesday, November 5, that marked a nearly $1 trillion monthly loss in market capitalization, which has dropped from $4.3 trillion recorded in early October to $3.4 trillion at the time of writing.
Major cryptocurrencies all saw major losses. Bitcoin (BTC), down 8% on the week, tested the critical $100,000 support level, while Ethereum (ETH) dropped to $3,300, plummeting 16% over the same period.
Institutional investors also pulled $1.15 billion from Bitcoin ETFs last week, signaling waning sentiment among traditional institutions, which were the key driver behind Bitcoin’s rally to $126,000 last month.
The downturn has resulted in $2.1 billion in overnight liquidations recorded on Wednesday, as approximately 486,069 traders were liquidated during this period. Ethereum and Bitcoin were once again the biggest casualties, losing $679.9 million and $644 million, respectively. Long positions bore the brunt, making up nearly 79% of total liquidations, or $1.67 billion.
Despite the price carnage, Bloomberg ETF analyst Eric Balchunas remains positive that Bitcoin can pull through, citing solid annualized returns:
“Even with the pullback Bitcoin is up 300% since BlackRock filed for an ETF 30 months ago. That’s nearly 80% annualized. Relax,” wrote Balchunas.
The implication seems to be that the current downturn is an overreaction driven by technical factors and leverage, not a fundamental issue. Namely, as crypto is hypersensitive to technical changes, minor shocks can easily translate into major drawdowns.
Still, while the analyst may be optimistic, the downward trajectory has sparked fears of another so-called crypto winter, or a prolonged bearish period. For instance, some forecasts, such as those by analyst Ali Martinez, warn that Ethereum could drop to as low as $1,700 if it fails to break past $4,000.
