Bitcoin's Steep Fall: What's Behind the Sudden Drop?

Market Downturn

Bitcoin's Value Dive: Bitcoin's value plummeted to $80,600, marking a 10% weekly loss and the biggest monthly drop since June 2022 with a 23% decline.
Key Level Tested: The price tested the 100-week exponential moving average, a level not seen since October 2023.
Liquidations: The sharp fall triggered over $1 billion in Bitcoin futures liquidations, signaling a harsh downturn.

Market Cap Shrinkage: Since October, the total crypto market cap has dropped from $4.2 trillion to $2.8 trillion, a 33% decline.
Rapid Bear Market: This rapid decline has been dubbed one of the fastest crypto bear markets ever.
Selling Pressure: Crypto funds saw $2 billion in weekly outflows, the largest since February.
Bitcoin and Ethereum: Bitcoin and Ethereum saw $1.4 billion and $689 million in withdrawals respectively.

Spot Bitcoin ETF Flows: Institutional investors are pulling out, with spot Bitcoin ETF flows remaining negative.
BlackRock's ETF: BlackRock's spot ETF is on track for its largest weekly outflow ever, close to surpassing the $1.17 billion record from February 2025.
Structural Decline: Analysts are calling it a structural decline.

NFCI Trend: The National Financial Conditions Index (NFCI) is trending lower, historically preceding Bitcoin rallies by four to six weeks.
Historical Precedents:
October 2022: Easing financial conditions led to a 94% Bitcoin rally.
July 2024: Tightening conditions signaled stress before Bitcoin surged from $50,000 to $107,000.
Current NFCI: The NFCI sits at -0.52 and is still falling. A deeper move toward -0.60 could mark an acceleration phase.
Federal Reserve's Plan: The Federal Reserve's plan to rotate mortgage-backed securities into Treasury bills in December could inject liquidity, similar to the 2019 "not-QE" event that preceded a 40% Bitcoin rally.

Liquidity Expansion Window: If the NFCI continues to decline into mid-December, it could signal the start of a new liquidity expansion window.
Potential Turning Point: Based on past trends, Bitcoin's next major move could align with early to mid-December 2025, offering a potential turning point for market participants.