Author: CryptoCompound, Translator: Shaw Jinse Finance
Bitcoin has just experienced something unseen since June—a drop below six figures. The market watched in astonishment as Bitcoin's price briefly touched below $99,000 before rebounding. This was a sharp and emotional swing, leading to margin calls for leveraged traders and panic among newcomers who had become accustomed to viewing $100,000 as a new bottom.
But the truth is: this is not the end of the bull market cycle. It's a necessary correction—after months of continuous gains, the market needs a healthy cooling-off. Data shows that leverage is being liquidated, ETF flows are normalizing, and market sentiment is readjusting. If you know what to look for, you'll find that this decline is less about panic and more about opportunities.
What caused the decline?
To understand this pullback, we must focus on three key forces that collided within just a few days: stock selling, slowing ETF inflows, and deleveraging.
1. The connection between cryptocurrencies and the stock market.
Cryptocurrencies are now more correlated with the stock market than ever before, especially with tech and artificial intelligence stocks. Earlier this week, the Nasdaq fell by more than 1%, and Bitcoin fell almost in tandem. Why? Because the same investor group is driving both—momentum traders chasing high-beta stocks in artificial intelligence, semiconductors, and digital assets.
When Palantir and Nvidia's stock prices fell, risk appetite for all speculative assets declined. Bitcoin's plunge was not due to its own fundamental problems, but rather a fluctuation in the overall risk cycle.
2. ETF fund inflows have cooled down.
Bitcoin ETFs saw their first consecutive days of net outflows in months. After months of sustained demand, some investors opted to take profits or reduce risk as the stock market weakened. This shift did not disrupt the overall trend, but it eliminated a key buffer.
When ETF inflows stagnate, spot demand also weakens. This is why the sell-off is happening faster than ever before—structural demand is insufficient to absorb the selling pressure.
3. A wave of liquidations due to leveraged positions.
According to CoinGlass data, over $1 billion in long contract positions were forcibly liquidated within 48 hours, marking the largest wave of liquidations in recent months. High funding rates, excessive leverage, and crowded long contract trading collectively triggered this storm. When the price of Bitcoin fell below $100,000, stop-loss orders were triggered simultaneously, leading to a chain reaction of liquidations.
This is not a panic sell-off by institutions, but rather traders being forced to liquidate their positions due to insufficient margin – something that has happened dozens of times in cryptocurrency history.
Technical chart
Bitcoin's chart still looks good—but it's in a delicate position.
Short-term support levels : $95,000 to $97,000. This area coincides with the consolidation zone of June and July, and is also where most of the liquidation occurred. If Bitcoin can hold this range, it may first form a bottom before continuing its upward trend.
Resistance levels : $100,000 to $102,000. Psychological price levels are crucial in the cryptocurrency space. Historically, a decisive retest of the $100,000 mark, supported by stable funding sources and a rebound in ETF demand, would be a bullish reversal pattern.
Downside risks : $90,000 to $85,000. If the stock market continues to weaken and ETF outflows persist, Bitcoin may retest lower price levels. However, unless these support levels are broken with increased volume, this remains a normal pullback in a bull market, not a trend reversal.
Zooming in on the weekly chart reveals an important piece of information: Bitcoin remains in a long-term uptrend. Higher highs and higher lows—this structure remains intact. This pullback merely dampened excessive optimism in the short term.
Macro background
The macroeconomic context helps explain the increased volatility of cryptocurrencies.
The uncertainty surrounding the US government shutdown has created a temporary risk aversion.
The strengthening of the US dollar index (DXY) put pressure on all risk assets.
U.S. Treasury yields rose slightly after the Federal Reserve issued hawkish comments.
The decline in artificial intelligence concept stocks has eliminated speculative momentum in the overall market.
When macroeconomic uncertainty meets crowded cryptocurrency positions, a pullback is inevitable. However, beneath the surface, no structural negative factors have yet emerged. Inflation is cooling, global market liquidity remains ample, and central banks are more inclined to cut interest rates than raise them.
This is not a bearish environment for digital assets, but rather a highly volatile environment.
ETF Fund Flows: The Real Pulse of the Market
ETF fund flows have become the pulse of Bitcoin price movements.
After months of continuous inflows, early November saw the first consecutive net outflows, totaling hundreds of millions of dollars. Compared to the more than $15 billion in funds that have accumulated since the ETFs were approved, this outflow is negligible, but enough to temporarily reverse market sentiment.
These fund flows are crucial for one simple reason: they represent genuine spot demand. They are not leveraged futures contracts or short-term speculation—they are long-term holders accumulating Bitcoin through regulated channels.
When liquidity returns (which it certainly will), it will act like a magnet, pulling Bitcoin back above $100,000. Historically, ETF slowdowns have typically lasted one to two weeks before buyers return. If this pattern continues, the recovery could be faster than most people expect.
Market Psychology: Fear Reset
Every bull market needs to go through periods of panic. These periods of panic clear leverage, reset expectations, and lay the foundation for the next wave of growth.
When Bitcoin reached $100,000, many new traders thought, "This time it's different." They firmly believed Bitcoin would only rise—until it stopped rising. Now, these traders can only stand by and watch, licking their wounds. And this is exactly the situation long-term investors are happy to see.
When market sentiment shifts from euphoria to skepticism, the market becomes worth investing in again.
A reliable metric is funding rates. After surging into positive territory, they have now fallen back to neutral levels. This means that overcrowded long positions have decreased, and the market structure is more balanced. During these periods, smart money thrives—when the noise clears, conviction trumps momentum.
What will happen next?
Three scenarios are possible next.
Baseline Scenario (60% probability) : Consolidation and Reconstruction. Bitcoin will consolidate between $95,000 and $105,000 over the next 1-3 weeks. ETF flows will return to neutral or positive, and funding rates will remain stable. This will lay the foundation for Bitcoin's gradual recovery to $110,000 later this month. → This is the most likely outcome.
Bearish Scenario (25% probability) : Bitcoin may pull back further to $85,000 to $90,000. If the stock market continues to decline, or ETF outflows persist for a week, Bitcoin may retest deeper support levels. Although still in an overall uptrend, a more significant pullback will test investors' patience.
Bullish Scenario (15% probability) : Rapid recovery and surge. If ETF inflows quickly turn positive and the Nasdaq rebounds, Bitcoin is expected to quickly recover to $100,000 and return to $110,000 to $115,000 within days. This would be a classic "failed decline rally," punishing those who shorted at the short.
Key Indicators Overview
Over the next 10 days, this information will tell you everything:
ETF fund inflows/outflows – positive figures for two to three consecutive trading days indicate a renewed rebound in demand.
Funding rates – if they remain near neutral levels, the market is healthy.
Increased open interest with stable prices indicates early accumulation; increased open interest with rising prices indicates a trend reversal.
Stock market sentiment – Nasdaq rebounds typically precede cryptocurrency recovery by 24-48 hours.
On-chain fund flows – focus on exchange balances; a declining balance means investors are moving Bitcoin to cold wallets (positive).
When multiple such indicators show a positive trend simultaneously, the bottom may have already been reached.
Big picture perspective
From a broader perspective, this pullback has not altered Bitcoin's long-term trend. Institutional adoption continues. Exchange-traded funds (ETFs) provide a steady stream of inflows into the market. Stablecoin supply is increasing again—a leading indicator of cryptocurrency liquidity.
Meanwhile, miners have made a fortune, computing power has continued to reach new historical highs, and the development of Layer 2 scaling technology has been faster than ever before.
What we're experiencing now is a sentiment fluctuation within a market with strong fundamentals. Every cycle has two or three such moments—times when convictions are tested. And each time, those who understand the market structure and remain patient ultimately emerge stronger.
For both professional investors and serious retail investors, this decline provides a clear signal:
The bull market is not over; it has entered its mature phase.
The market structure remains robust, and liquidity levels are clearly defined.
ETF inflows, macro risk sentiment, and funding conditions are the three major levers influencing market trends.
A price drop below $100,000 is not a "crash," but rather a reset of market sentiment—and resets often contain opportunities.
Once ETF demand recovers and leverage is rebuilt at a reasonable pace, Bitcoin could quickly retest $110,000 to $115,000, and if liquidity conditions remain good, then $125,000 to $130,000 by the end of the year would be a reasonable target price.
What's the wise thing to do now? Observe the flow of funds. Gradually increase your holdings. Let the market confirm its trend, rather than being swayed by emotions. Because history has proven that every panic sell-off is followed by a rally, and this rally is often not favored until it has risen more than halfway.
Final Thoughts
Every bull market teaches us the same lesson: moments of doubt are often moments of opportunity.
Bitcoin's drop below $100,000 doesn't signify weakness, but rather reveals the true state of investor confidence. Short-term traders are exiting the market, while long-term investors are quietly accumulating positions.
If the next few weeks follow a similar pattern to previous cycles, then prices below $100,000 will soon look like a gift rather than a warning.
