As the price of Bitcoin fell from a peak of $126,000 in early October to $86,500 on November 21, four consecutive weeks of decline not only erased the annual gains but also marked the longest drop in nearly a year. This crash was like a domino effect, undermining confidence in the crypto market—within 24 hours, 225,000 investors were liquidated for $1.066 billion, major players like MicroStrategy saw their market value shrink by over 30%, and the total market capitalization of the entire crypto market evaporated by over $1 trillion.

Three driving forces: institutional withdrawals, whale sell-offs, and macroeconomic chill

The current downward trend is not accidental, but a resonance of multiple negative factors:

- Institutional funds are collectively 'running away': Bitcoin ETFs have seen net outflows for five consecutive weeks, totaling over $2.5 billion, with BlackRock's IBIT seeing a single-day outflow of $463 million, and the withdrawal of institutional 'anchors' has left the market without support.

- Whales selling adds insult to injury: 'old players' holding Bitcoin for over seven years are selling at a rate of 1,000 coins per hour, with long-term holders selling 815,000 coins within 30 days, setting a new record since the beginning of 2024.

- Macroeconomic environment 'pulling the rug': the probability of a Federal Reserve rate cut in December has fallen below 50%, the real yield on 10-year U.S. Treasury bonds has risen, and in a high-interest-rate environment, investors are more inclined to hold stable assets, amplifying Bitcoin's 'risk attribute.'

The technical breakdown became the last straw: Bitcoin fell below the 365-day moving average (a historical bull-bear dividing line), and after losing the key support level of $85,000, quantitative trading systems triggered programmatic sell orders exceeding $1 billion, leading to a complete loss of panic control.

The market is diverging in 'extreme fear': who is bottom-fishing, and who is exiting?

When the fear and greed index fell to 10 (the lowest in nearly nine months), the market exhibited a bizarre divergence:

- Retail investors cut losses, whales accumulate: on-chain data shows that long-term holders net increased their holdings by 186,000 Bitcoin within a month, while retail and short-term holders continued to 'cut losses,' with net outflows from exchanges reaching a new high for the year.

- Mainstream coins resist losses, altcoins crash: Ethereum's decline is 11.38%, while purely speculative altcoins generally see declines exceeding 20%; the resilience of coins with application scenarios is highlighted, accelerating industry reshuffling.

Morgan Stanley's warning adds to the chill: if the Federal Reserve maintains high interest rates in December, Bitcoin could drop to $74,000, a further decline of 30% from current levels. However, some analysts point out that the current RSI is in the oversold zone, and historically similar indicators have often been accompanied by short-term rebounds.

The 16-year 'crash cycle': Will Bitcoin 'zero out'?

From the 99.9% crash during the Mt. Gox incident in 2011 to the FTX collapse below $16,000 in 2022, Bitcoin has experienced eight 'zeroing crises' in its 16-year history, yet each time it has reborn from the ruins. What’s different this time is:

- Industry resilience has increased: no systemic risks have emerged from compliant leading institutions, and security tools such as decentralized exchanges and cold wallets have become widespread;

- Long-term logic remains unchanged: underlying drivers such as halving cycles and institutional allocation demands are still present, but short-term liquidity and sentiment recovery will require time.

For ordinary investors, this crash feels more like a 'risk education'—keeping cryptocurrency assets within 5% of their portfolio might be the key to surviving volatility.