After enduring a ‘forgettable’ October, Bitcoin, the world’s largest digital asset, remains under pressure due to a stronger US dollar and a new wave of turmoil in the decentralized finance (DeFi) sector.
According to Zhitong Finance APP, Bitcoin extended its decline on Tuesday. Following a “forgettable” October, the world’s largest digital asset remained under pressure due to a stronger US dollar and renewed turmoil in the decentralized finance (DeFi) sector. Bitcoin fell 2.5% at one point, reaching USD 104,179, marking a more-than-two-week low. Meanwhile, the second-largest cryptocurrency, Ethereum, dropped 3.4%, falling below the USD 3,500 mark, further widening its previous retreat from higher levels.
This decline occurred three weeks after the crypto market experienced a historic liquidation event, during which tens of billions of leveraged crypto positions were forcibly liquidated. Since then, investors appear reluctant to bet on a rapid rebound in Bitcoin.
Market maker Keyrock noted in a report that traders are “hesitant about re-entering the market.” The open interest in Bitcoin perpetual futures contracts currently stands at approximately USD 68 billion, down about 30% from the October peak. Liquidations continue—CoinGlass data shows that selling pressure across the entire market has wiped out roughly USD 1.2 billion worth of long positions in just the past 24 hours. Additionally, investors have withdrawn over USD 1.8 billion from spot-traded funds (ETFs) linked to Bitcoin and Ethereum in the last four trading sessions.
The macroeconomic environment is also unfavorable. Linh Tran, a market analyst at XS.com, stated that market expectations for a Federal Reserve rate cut in December have been almost entirely quashed, signaling that “a prolonged period of high-interest rates is forming,” which “increases the opportunity cost of holding non-yielding assets like Bitcoin while dampening short-term speculative momentum.”
Risk events in the decentralized finance space have further weighed on market sentiment. On Monday, Balancer, a decentralized liquidity protocol, suffered a vulnerability exploit, resulting in the theft of over USD 100 million in digital assets. Derek Lim, head of research at Caladan, pointed out: “The current crypto market is facing multiple short-term headwinds, which is undoubtedly adding insult to injury for a fragile market that has just undergone massive liquidations in October and a string of hacking incidents.”
