Bitcoin Slumps Below $100,000 for First Time Since June as Investor Sentiment Turns Cautious

Gerik

Summary:

Bitcoin has plunged over 20% from its October peak, falling below the $100,000 mark amid rising macroeconomic uncertainty, cautious Fed signals, and fading institutional enthusiasm...

Bitcoin Breaks Below Psychological Threshold as Market Sentiment Reverses

Bitcoin, the world’s largest cryptocurrency, slipped to $96,794 in early Asian trading on November 5, marking its first dip below the $100,000 threshold since June. This sharp decline represents a 7.4% loss in just 24 hours and a more than 20% drop from its historic peak reached a month earlier. The downturn underscores a significant shift in investor psychology, driven by macroeconomic stressors and waning momentum in both equity and crypto markets.

Recent macroeconomic data out of the United States has intensified fears of stagnation. October marked the eighth consecutive month of contraction in the U.S. manufacturing sector, while stock markets have shown little upward momentum, further eroding investor confidence.

Compounding this is the political uncertainty stemming from a U.S. government shutdown and growing skepticism around near-term monetary easing. Federal Reserve Chair Jerome Powell recently refrained from committing to a December rate cut, reinforcing market perceptions of prolonged restrictive policy. The causal relationship here is direct: Powell’s neutral tone dampened rate-cut expectations, strengthening the U.S. dollar and risk aversion, both of which weigh on crypto assets like Bitcoin.

October’s Flash Crash Continues to Reverberate

The current sell-off can be traced back to the abrupt correction on October 11, when Bitcoin crashed from $120,000 to just over $102,000 in a matter of hours. That incident, largely driven by massive liquidations in leveraged futures, reshaped trader behavior. Open interest in Bitcoin futures remains well below pre-crash levels, indicating persistent caution and reduced speculative appetite.

This psychological shock has had a lasting causal effect on market structure. As Chris Newhouse, Head of Research at Ergonia, explains, “The return to June lows reveals a fragile market still recovering from the liquidation cascade in October. That event has fundamentally altered how traders engage with downside momentum.”

Crypto ETFs and Retail Participation Retreat

Investor retreat is also evident in fund flows. Exchange-traded funds (ETFs) linked to Bitcoin and Ether have seen consistent outflows over the past month, a reversal from earlier this year when institutional inflows were a major driver of crypto gains. These withdrawals coincide with a broader cooling in retail activity, suggesting a cyclical shift rather than a temporary pause.

At the same time, Ether has dropped 15%, and most altcoins are trading lower, highlighting the systemic nature of the correction. Bitcoin’s muted year-to-date return now below 10% also underscores its weakening appeal as a portfolio hedge. In contrast, equity indices have significantly outperformed, with AI-driven tech stocks leading the way earlier this year, although even those have started to face valuation-driven pullbacks.

Convergence With Tech Equities Adds Pressure

The trajectory of Bitcoin has increasingly mirrored high-growth tech stocks such as Nvidia and Palantir, which are now facing downward pressure due to concerns over inflated valuations. This correlation, while not causative, reflects how speculative capital flows across risk assets tend to move in tandem, especially during sentiment reversals.

Bitcoin’s decline below $100,000 serves as a clear signal that the euphoria from earlier this year has faded. With macroeconomic risks mounting, policy direction unclear, and investor positioning turning more defensive, the crypto market appears to be entering a consolidation phase. Unless institutional inflows resume and macro headwinds ease, the current sentiment cycle suggests that any recovery will be gradual rather than immediate. In the meantime, Bitcoin’s inability to act as a risk hedge reinforces the need for strategic reassessment among long-term holders and short-term speculators alike.

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