The cryptocurrency market is facing another round of heavy losses as Bitcoin dropped below $104,000, reaching its lowest level since June. This decline marks a 3.2% fall in just one day and a steep 17.5% drop from its all-time high in early October. The fall has also affected other major cryptocurrencies, creating a wave of panic among investors and traders across the market.
Bitcoin’s decline has not come alone. Major altcoins such as Ethereum, XRP, BNB, and Solana have also suffered losses ranging between five and nine percent at the start of the week. According to CoinGlass data, total liquidations in the crypto market reached $1.37 billion, showing that many traders were forced to close their positions as prices continued to fall.
Market sentiment has turned increasingly negative. Data shows that the annualized futures premium, which measures how much investors are willing to pay for bullish positions, has dropped from seven percent to below four percent in a week. On top of that, prediction platform Myriad revealed that users are now more bearish, with 71 percent expecting Bitcoin to drop to $100,000 rather than rise to $120,000.
Experts say the immediate reason behind this sharp downturn is a growing crisis within the decentralized finance, or DeFi, sector. Stream Finance, a major DeFi protocol, recently reported losing $93 million in assets. In total, bad debts across DeFi lending markets are now estimated at around $284 million. This has caused what analysts are calling “contagion fears,” as multiple DeFi platforms, stablecoins, and vaults face exposure to these losses.
The confidence in the DeFi space had already been shaken by earlier problems, including the $128 million Balancer exploit and a massive liquidation event in October. Analysts note that when markets are already fragile, any new shock can lead to widespread panic. As a result, investors are choosing to reduce risk by pulling money out of both crypto and traditional markets.
External economic pressures have also made things worse. Weak employment data in the United States, a more aggressive Federal Reserve stance on interest rates, and uncertainty about an ongoing government shutdown have all contributed to a risk-off mood among investors. Volatility in the bond market has added more fuel to the fire, pushing many traders to stay away from risky assets like cryptocurrencies.
Overall, Bitcoin’s fall below $104,000 highlights a period of fear and uncertainty across the entire crypto market. With both internal DeFi troubles and global economic worries in play, analysts believe the market is now in a de-risking phase that could continue until investor confidence begins to recover.
Analysts will be tracking activity on major exchanges like Coinbase Global Inc. (NASDAQ: COIN) to assess how trading activity is reflecting the changing sentiments in the crypto community.
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