Bitcoin: Is a drop below $90K bound to happen in November?

Understanding the Current Market Landscape

The past few weeks have seen Bitcoin facing considerable downward pressure, characterized by substantial price dips and heightened market fear. In a recent downturn, Bitcoin experienced a 10.6% dump, retesting the $92,000 support level for the first time since early in the second quarter of the year.

This correction was accompanied by a wave of liquidations, with nearly $2 billion in positions being wiped out from the market within the same period. Looking at broader trends, CoinGlass data indicates that over the past 16 days, there have been three instances where liquidations surpassed $1 billion, and daily liquidations for high-cap assets alone have exceeded $500 million, intensifying Bitcoin’s downward movements.

Diverging Sentiment and ETF Outflows

Market sentiment has shifted dramatically, with “extreme fear” now gripping investors, a clear indicator of capitulation phases among short-term holders. This sentiment is further exacerbated by significant outflows from Bitcoin exchange-traded funds (ETFs). November is emerging as a potentially record-breaking month for ETF outflows. So far, $2.3 billion has exited mid-month, marking the second-largest outflow on record, and this figure could climb higher if selling pressure persists, potentially making November the month with the largest outflows ever recorded.

For instance, U.S.-listed spot Bitcoin ETFs experienced net outflows of approximately $870 million on November 14th, marking the second-largest single-day withdrawal since their inception. Additionally, the week of November 10th to 14th saw a staggering $1.11 billion in outflows from US spot Bitcoin ETFs, marking the third consecutive week of such withdrawals.

The Severity of the Current Correction

Bitcoin’s slip below $92,000 signifies a 23% correction from its all-time high. While past corrections, such as the April cycle’s 32% drop from $109,000 to $74,000, were more substantial in percentage terms, the current market strain appears uniquely severe. During that April correction, Bitcoin’s supply in profit remained above 75%. In contrast, the current pullback has seen Bitcoin’s supply in profit plummet to 68%, a level not witnessed since the 2023 bear market.

This lower “supply in profit” metric suggests that a larger proportion of Bitcoin holders are now underwater on their investments, particularly short-term holders.

Short-Term Holders Under Pressure

The aggressive buying by short-term holders (STHs) near the market’s peak in this cycle has amplified the impact of the current correction. As Bitcoin continues to breach key support levels, more STHs find themselves in a losing position.

The combination of extreme fear, thin bid liquidity, and elevated liquidation risks creates an environment where the market struggles to absorb selling pressure effectively. This confluence of factors makes a sustained drop below $90,000 appear increasingly likely.

FAQ

Q1: What is “supply in profit” and why is it important for Bitcoin?

Supply in profit refers to the percentage of circulating Bitcoin supply whose current market price is higher than the price at which it was last moved. It’s an important metric because it indicates how many holders are currently sitting on unrealized gains. A lower percentage suggests more holders are at a loss, potentially increasing selling pressure if prices continue to fall.

Q2: How do ETF outflows impact Bitcoin’s price?

ETF outflows indicate that institutional investors are redeeming their shares in Bitcoin exchange-traded funds, effectively reducing demand for Bitcoin on the open market. This selling pressure can contribute to price declines, especially when combined with other bearish indicators and a prevailing sentiment of fear.

Q3: What does a rising leverage ratio imply for Bitcoin’s price?

A spiking leverage ratio suggests that traders are increasing their exposure to Bitcoin through borrowed funds. While this can amplify gains during upward movements, it also magnifies losses during price drops, leading to forced liquidations that further accelerate downward price spirals.

Conclusion

The current confluence of factors—including significant price corrections, widespread “extreme fear” among investors, record-breaking ETF outflows, and a high proportion of short-term holders facing losses—paints a challenging picture for Bitcoin’s immediate future in November. While market dynamics are inherently unpredictable, the mounting pressure from these indicators suggests that a retest, and potentially a break below, the $90,000 threshold is a distinct possibility. Investors are closely watching for signs of stabilization or renewed demand that could shift the narrative away from this bearish outlook.