Bitcoin once fell below the $81,000 mark, possibly marking the largest monthly decline since 2022.

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The world's largest cryptocurrency, Bitcoin, is experiencing its worst monthly performance since the 2022 industry crash.

On Friday, Bitcoin’s price fell to $80,553 at one point. Despite a rebound late in the New York session, it remains down over 30% from the record high of $126,000 set in early October. This plunge has resulted in a roughly 25% decline for Bitcoin in November, marking its worst performance since 2022.

In June of that year, Bitcoin dropped 41% in a single month after the collapse of the TerraUSD stablecoin project triggered a series of company failures, eventually leading to the downfall of the FTX exchange.

On Friday, the second largest cryptocurrency, Ether, also suffered heavy losses, falling as much as 8.9% and dropping below $2,700. According to CoinGecko, the total crypto market capitalization fell below $3 trillion for the first time since April.

(Total crypto market capitalization fell below $3 trillion for the first time since April)

Analysts believe that the combination of forced liquidations and structural ETF sell-offs has left the market in a fragile state, while institutional investors have apparently not bought on the dip.

Wave of Liquidations and Selling Pressure Intensify Market Volatility

Bitcoin’s plunge began with a large-scale liquidation event on October 10. That day, $19 billion in leveraged positions were force-closed, wiping about $1.5 trillion from the total crypto market capitalization. The market has not recovered since.

In the past 24 hours alone, another $2 billion of leveraged positions were liquidated, according to CoinGlass data. Open interest in perpetual futures has fallen 35% from the October peak of $94 billion, indicating investors are significantly reducing risk exposure.

(Perpetual futures open interest has dropped 35% from the October peak of $94 billion)

Chris Newhouse, Director of Research at decentralized finance institute Ergonia, stated:

The convergence of forced liquidations and structural ETF sell-offs has put the market in a particularly vulnerable state, where any attempt to stabilize the market will immediately face supply pressure from multiple sources.

According to blockchain research firm Arkham Intelligence, a Bitcoin wallet labeled "Owen Gunden," which has been holding Bitcoin since 2011, began selling at the end of October, ultimately selling a total of $1.3 billion worth of Bitcoin and clearing out its last holdings on Friday.

("Whale" Owen Gunden cleared out the last holdings on Friday, cumulatively selling $1.3 billion since October)

Vetle Lunde, Head of Research at K33, pointed out:

By itself, Owen Gunden’s selling is basically irrelevant, equivalent to yesterday's ETF selling volume, just spread out incrementally over a month. But it does highlight one of Bitcoin’s core themes this year: The old players are selling, and on a large scale.

Market liquidity concerns have further amplified price swings. Adam Morgan McCarthy, Head of Research at crypto data provider Kaiko, said:

This week marks the start of the holiday season, and liquidity in all markets may dry up. If investors keep cutting positions before the holidays, and liquidity dries up further, it could intensify market volatility.

Institutional Funds Pull Out, Sentiment Indicators Hit Lows

Institutional investors have not shown any willingness to buy the dip.

On Thursday, net outflows from 12 US Bitcoin ETFs reached $903 million, the second largest single-day redemption since their launch in January 2024. This sharply contrasted with the market fervor after Trump won the presidential election, when investor sentiment indicators once hit a high of 94 out of 100.

Currently, the cryptocurrency investor sentiment index compiled by CoinGlass has fallen to its lowest level since the 2022 crash. This index combines volatility, momentum, and demand factors, and currently shows traders are in an "extreme fear" state.

Pratik Kala, portfolio manager at Australian hedge fund Apollo Crypto, said:

Overall sentiment is extremely poor. There appear to be passive sellers in the market, and it’s unclear how long this will last.

IG Australia analyst Tony Sycamore noted in a report:

The market may also be testing the pain threshold of Strategy Corp.

This Bitcoin treasury company run by Michael Saylor has seen its mNAV ratio (enterprise value to Bitcoin holdings ratio) drop to just above 1.2.

WallstreetCN previously mentioned that Strategy Corp. may lose its seat in benchmark indices such as the MSCI US Index and Nasdaq 100, with the final decision expected to be announced by January 15 next year.

Companies attempting to replicate Saylor’s crypto hoarding strategy are also under pressure. Firms like Sequans Communications, ETHZilla, and FG Nexus have begun selling some holdings this year to buy back shares to support falling stock prices.

Risk Warning and DisclaimerThe market involves risks, and investments should be made cautiously. This article does not constitute personal investment advice, and does not take into account the individual investment goals, financial situation or needs of specific users. Users should consider whether any opinions, views or conclusions herein are suitable for their specific circumstances. Investment based on this content is at your own risk. ```