Bitcoin Falls to $65K Amidst Gloomy Crypto Sentiment
On Yesterday, Bitcoin prices experienced a decline, facing losses as a widely followed indicator of crypto sentiment hovered near all-time lows. The leading digital currency has seen a decline, now sitting at around $65,000, based on the latest data. Currently, it has plummeted nearly 50% from its all-time high of over $126,000, which was achieved late last year. This occurred just after the CMC Crypto Fear and Greed Index hit a reading of five, marking its lowest level ever recorded. “It is safe to assume that no one anticipated this in October!” Tim Enneking stated “An extraordinary reversal of fortune, to say the least.” In a striking development, the Fear & Greed Index has plunged to an unprecedented low of 5! (This index operates on a scale from 0 to 100.) There has never been this level of fear surrounding the crypto space. He further elaborated, stressing that no one can definitively pinpoint the exact cause of bitcoin’s recent price decline. “The proximate cause remains a mystery,” emphasized Enneking. “The usual suspects: whale conspiracy, massive short position holder pushing the market down somehow, flight from risk-on assets because of Trump’s steady disruption of the post-WWII world order, retail investors losing interest (certainly true, but how much causality…), etc.”
“But the truth of the matter is that no one knows exactly why, so soon after the latest ATH, BTC has lost more than half its value – and it’s possible we’ll take out that recent low at $60k as well,” he stated. When queried about the factors driving bitcoin’s recent downturns, a number of analysts surveyed for this piece pointed to various influences. One factor they highlighted consistently was the impact of derivatives markets. Crypto Confidential: Forbes’ ultimate resource for all things crypto and blockchain, sent straight to your inbox every Saturday. “Price discovery is happening in perpetual markets like Hyperliquid. Over the past day, funding rates on BTC flipped negative indicating more shorts than longs,” he noted via email. “That funding rate has since flipped back following today’s capitulation in price. My crypto circles have also pointed to prediction markets culling funds from crypto,” stated Huang. “The next shiny object used to be silver and gold, and now fast money retail gamblers are seeking prediction markets instead of crypto.” In summary, retail investors offloaded BTC to place their bets on the Superbowl. Daniel Reis-Faria highlighted the significant impact that leverage has had on the recent price movements of bitcoin. “What we’re seeing today is a reset in leverage, not a collapse in conviction,” he asserted in an emailed commentary. “Bitcoin is trading in the mid $60,000 range, and I predict ETH to slip into the high $1,000s, reflecting macro hesitation and capital stepping back from crowded ETF and derivatives positioning.”
“Funding rates have shifted to a defensive stance, leveraged longs have predominantly been eliminated, and this deleveraging process is beneficial.” This represents a classic scenario of late-cycle consolidation, where excess risk is eliminated prior to the next significant shift. Daniel Bara weighed in on the situation, stating via email that “The decline reflects institutional de-risking, leveraged liquidations, and supply-side pressure, compounded by macro shifts. Since November, more than $5 billion has flowed out of Bitcoin ETFs as institutions have steadily de-risked,” he noted. “Trump’s tariff announcements on eight European nations triggered hundreds of millions in liquidations and demonstrated that Bitcoin trades as a risk asset during geopolitical stress, not as a hedge against it,” added Bara. The analyst highlighted further market pressures, stating that “Bitcoin miners whose all-in production costs now sit around $87,000, well above spot price, are being forced to sell reserves to stay solvent. Strategy holds over 700,000 Bitcoin at a cost basis above current prices, and the market prices in the possibility of forced selling even if it never happens,” he stated.
William Stern adopted a unique approach, concentrating on the everyday investors who are selling their bitcoin to fulfill various needs. “Honestly, don’t overanalyze the chart. Main Street is currently viewing Bitcoin as a piggy bank, and they are breaking it open”. “You have small business owners selling not because they hate the tech, but because insurance premiums are up 22% and they gotta make payroll on Friday. It’s not really a crypto crisis, it’s a liquidity crisis.”
