Global financial markets are facing a broad-based selloff this week as appetite for risk assets, including cryptocurrencies and stocks, begins to wane. Bitcoin plunged below the historic $100,000 level on Tuesday, while the S&P 500 index and gold fell 3% and 10% from their respective peaks.
On Wednesday, Bitcoin dropped to an intraday low of $99,110 before recovering slightly, marking a 21% decline from its October peak, according to CoinGecko data. The broader crypto market capitalization fell to $3.44 trillion, its lowest level in four months. The sell-off also triggered over $2 billion in liquidations across digital assets, marking the second consecutive day of a major unwind in leverage.
Regardless of the key catalysts driving the selloff or how strong the network fundamentals appear, the critical question for investors is how much further prices could decline from here.
Ryan Yoon, Senior Research Analyst at Tiger Research, expects Bitcoin to hold the $98,000 level and maintains his long-term $200,000 price target.
The downturn reflects a fundamental shift in market dynamics, specifically increased risk aversion, Tim Sun, Senior Researcher at HashKey Group, told Decrypt. “Bonds were the only asset class to post meaningful gains, while most risk assets—including Bitcoin, gold, and equities—saw broad-based pullbacks,” he said. “Even if downside pressure persists, the $85,000 level remains a strong area of support for Bitcoin.”
USD strength may be one of the main driving forces behind the market-wide fall in prices. Jiehan Chen, Operations Onboarding Lead Analyst at Schroders, shared this view with Decrypt. Other experts also pointed to a strengthening U.S. dollar as a key pressure point for dollar-denominated risk assets.
Sun further highlighted concerning signals in short-term funding markets, including widening spreads and increased usage of the Federal Reserve’s Standing Repo Facility. Additionally, the U.S. Treasury’s account balance has surpassed $1 trillion, effectively draining liquidity from the system.
This tightening liquidity environment has amplified fears and uncertainty amid the ongoing U.S. government shutdown, which is likely to extend through December. On the prediction market Myriad, owned by Decrypt’s parent company Dastan, users placed a 98.7% chance that this government shutdown will become the largest in U.S. history.
While the government shutdown is sparking fear, Derek Lim, Head of Research at Caladan, told Decrypt that tightening liquidity is amplifying the ongoing selloff.
### On-Chain Data and Market Sentiment
Despite the sharply negative sentiment, on-chain data reveals a more nuanced picture.
According to verified CryptoQuant analyst XWIN Research, Bitcoin’s recent dip below $100,000 is primarily sentiment-driven, with the Fear & Greed Index plunging to 21. The analyst highlighted that key network fundamentals remain strong, with hash rates near all-time highs and $10.7 billion in stablecoins flowing into Binance, potentially serving as dry powder for future purchases.
Furthermore, despite Bitcoin’s drop below $100,000, social data indicates there are still many confident buyers taking advantage of dips. On-chain analytics platform Santiment noted this in a Wednesday tweet, echoing XWIN Research’s optimistic perspective.
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As the markets continue to navigate this period of volatility, investors will be closely monitoring support levels and liquidity conditions. While risk aversion currently dominates, the underlying strength in network fundamentals and buyer interest could provide a foundation for recovery in the weeks ahead.
https://bitcoinethereumnews.com/bitcoin/crypto-stocks-fall-as-traders-pivot-how-low-can-bitcoin-go/
