Bitcoin crashed below $90,000 on Tuesday for the first time since April, triggering extreme fear across cryptocurrency markets as the digital asset erased all gains accumulated throughout 2025.
The world's largest cryptocurrency plunged to an intraday low of $89,426 during Asian trading hours, marking a devastating 30% decline from its record high of $126,000 reached on October 7.
The collapse wiped approximately $600 billion in market value over just six weeks, sending the Crypto Fear & Greed Index plummeting to 10, a level indicating extreme fear and representing the lowest reading since late February.
As of Tuesday afternoon, Bitcoin traded around $89,953, with market analysts warning that further downside pressure could materialize if key support levels fail to hold.
What Triggered Bitcoin's Collapse to Seven-Month Lows
The selloff accelerated dramatically as expectations for a Federal Reserve interest rate cut in December evaporated almost overnight. According to the CME FedWatch tool, the probability of a 25-basis-point rate cut plummeted to approximately 44% on Tuesday, down sharply from roughly 70% just one week earlier.
This sudden shift in monetary policy expectations sent shockwaves through risk assets, with cryptocurrencies bearing the brunt of the correction.
Adam McCarthy, a research analyst at Kaiko, identified two critical headwinds facing the crypto market. The Fed and AI bubble talk are two major obstacles for crypto and risk assets heading into the end of the year, McCarthy explained.
The combination of tighter monetary conditions and growing skepticism around artificial intelligence valuations created a perfect storm that devastated cryptocurrency prices across the board.
Did you know?
The Crypto Fear & Greed Index reading of 10 marks only the third time in 2025 that market sentiment has reached extreme fear levels, with the previous occurrences in late February and early March both preceding significant price rebounds within three weeks.
How Federal Reserve Uncertainty Sparked Mass Liquidations
The rapid price decline triggered a cascade of forced liquidations across cryptocurrency exchanges, amplifying the downward pressure on Bitcoin and other digital assets.
Vikram Subburaj, CEO of Giottus, reported that the pullback resulted in over $815 million in liquidations as leveraged positions were forcibly closed.
The third consecutive week of ETF outflows totaling $2 billion represented the steepest decline since February, signaling a fundamental shift in investor sentiment.
Market participants who had entered positions expecting continued Fed accommodation found themselves trapped as the central bank narrative shifted toward a more hawkish stance.
The speed and magnitude of the reversal caught many traders off guard, with automated liquidation mechanisms exacerbating price swings.
Technical analysts noted that Bitcoin broke through multiple support levels that had held firm throughout the summer and early fall, suggesting the correction could extend further if buying pressure fails to materialize.
Why Are Billions Flooding Out of Bitcoin ETFs
U.S. spot Bitcoin exchange-traded funds experienced one of their worst weeks of 2025, recording $1.1 billion in net outflows during the week ending November 14.
BlackRock's flagship IBIT ETF suffered particularly severe redemptions, with the fund seeing a record $1.26 billion in outflows throughout November.
The ETF's price dropped 16% to $52, levels not witnessed since April, reflecting the broader deterioration in cryptocurrency market conditions.
The institutional retreat from Bitcoin ETFs marked a dramatic reversal from the enthusiasm that characterized the first half of 2025.
Analysts suggested that profit taking, risk reduction ahead of year-end, and concerns about Federal Reserve policy all contributed to the exodus.
The sustained outflows indicated this was not merely short-term volatility but rather a meaningful reassessment of cryptocurrency allocations by institutional investors who had previously driven prices to record highs.
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Can Ethereum Survive Its Steepest Decline Since August
Ethereum faced even more severe pressure than Bitcoin, with the second-largest cryptocurrency plummeting to approximately $2,997, representing a staggering 40% decline from its August peak near $4,955.
Ethereum-focused ETFs bore the brunt of institutional selling, with outflows exceeding $1.4 billion since late October.
BlackRock's ETHA fund led the exodus, shedding $193 million in a single day, while Fidelity's FETH recorded an additional $3 million in departures.
The Ethereum selloff reflected broader concerns about the network's competitive position as alternative layer one blockchains gained market share.
Technical analysts warned that a breakdown below the $2,950 support zone could trigger additional downward pressure, potentially testing levels not seen since early 2025.
The failed Uptober rally, which traditionally sees seasonal strength in cryptocurrency markets, left investors disillusioned and more prone to exit positions as year-end approaches.
Is Michael Saylor's Bitcoin Strategy Still Working
Amidst the market carnage, Michael Saylor's Strategy continued its aggressive Bitcoin accumulation strategy, purchasing 8,178 BTC for approximately $835.6 million last week at an average price of $102,171 per coin.
The company now holds 649,870 Bitcoin acquired for roughly $48.37 billion, or an average cost of $74,433 per coin.
Strategy's unwavering commitment to Bitcoin as a treasury asset stood in stark contrast to the broader institutional retreat from cryptocurrency exposure.
Saylor quickly dismissed rumors that Strategy was selling its Bitcoin holdings, calling the reports false and reaffirming the company's aggressive buying stance.
In a CNBC interview, the Executive Chairman stated that the company is accelerating purchases and that investors may be pleasantly surprised by the company's recent activity.
He stressed that the Strategy's balance sheet remains stable with minimal leverage and no near-term debt pressure, positioning the firm to weather extended periods of price volatility.
The cryptocurrency market faces a critical juncture as 2025 draws to a close, with Federal Reserve policy decisions in December likely to determine whether Bitcoin can reclaim the $100,000 level or if further declines await.
Institutional investors remain cautious, evidenced by sustained ETF outflows and extreme fear readings across sentiment indicators.
Whether this represents a healthy correction within a longer-term bull market or the beginning of a prolonged crypto winter will depend largely on macroeconomic conditions and central bank actions in the coming weeks.
Strategy's continued accumulation suggests some institutional players maintain conviction in Bitcoin's long-term value proposition despite near-term turbulence.
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