Why bitcoin has dropped into a bear market weeks after hitting all-time highs
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Nov 4, 2025, 1:57 PM ET
- Bitcoin entered a technical bear market on Tuesday, down more than 20% from its most recent record high.
- October is historically a strong month for crypto, but the rally never materialized this year.
- A historic liquidation and macro jitters are among the factors weighing on the world’s top crypto.
Bitcoin dipped into a bear market on Tuesday, just a few weeks after touching a fresh all-time high.
The token traded below $100,000 for the first time since June, good for a decline of 21% from its most recent record high of $126,200 hit on October 6.
It was a month of dashed hopes for the world’s largest cryptocurrency, as dreams of “Uptober” faded with bitcoin suffering its first losing October in seven years.
Tuesday’s sell-off of over 5% coincided with broader weakness in risk assets. Stocks tumbled on valuation concerns following Palantir’s latest earnings and warnings from top bank execs.
However, the trouble for bitcoin has been brewing for weeks, and the market has been dealing with a cocktail of unique headwinds that have put downward pressure on prices.
“The sentiment index has fallen to 21, the lowest level since 9 April, indicating extreme fear. Last month, entering this territory triggered a rebound, but the market has already fallen below those levels,” Alex Kuptsikevich, chief market analyst at FXPro, said Tuesday morning.
Weeks of selling have whittled bitcoin’s year-to-date gain down to about 8%, lagging far behind the S&P 500’s gain of 15%.
The latest stretch of volatility has weighed on the market, stemming from trade jitters, a monumental liquidation event, waning bullishness for crypto treasury strategies, and a recalibration of rate-cut expectations after the last Fed meeting.
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“It looks like pure exhaustion across the board,” Haonan Li, the founder of blockchain firm Codex, said.
Here’s what has been dragging bitcoin down in the last few weeks.
A historic liquidation event
On October 10, a fresh round of trade jitters sparked a historic unwinding of bitcoin long positions in a short span of time.
Bitcoin investors liquidated $19 billion across exchanges in under 24 hours, with some estimates suggesting the amount was closer to $30 billion. It was the largest bitcoin liquidation ever.
“It’s almost irrelevant what news caused this,” Jonathan Man, a portfolio manager at Bitwise, said at the time. “Yesterday reminded us how fragile our market still can be.
The event was so extreme that market pros say investor sentiment has yet to recover weeks later, and some worry that heightened volatility could mean more liquidations ahead.
“A 10% move in either direction could trigger massive liquidations — roughly $11.39 billion in short positions if the price rises, or $7.55 billion in longs if it falls. This concentration of liquidations creates a powder keg effect and heightens the market’s sensitivity to broader news,” Farzam Ehsani, CEO of crypto trading site VALR, said.
Macro in the driver’s seat
“The cascading liquidations in offshore derivatives trading earlier in October set the tone,” Codex’s Li said, though he added that macro sentiment is now taking the reins of the market.
Risk assets broadly are taking a hit this week from fresh uncertainty related to everything from tech stock valuations to potentially less support from the Fed.
Bitcoin saw a fresh sell-off in the immediate aftermath of the October Fed meeting when Chairman Jerome Powell said that another rate cut in December is not a foregone conclusion. The lack of certainty of further central bank support for risk assets has weighed on bitcoin in the last week.
And while the stock market has been buoyed by the AI trade, bitcoin doesn’t have a similar catalyst, and the market is now looking for technical clues about when the sell-off might abate. Prior to Tuesday’s sell-off in the stock market, observers say stocks were getting a boost from investors fleeing October’s crypto carnage and rotating into equities.
“When the stock market and bitcoin started to decline, investors may have taken money from bitcoin to cover their position in the stock market, which then started to rebound,” said Marcus Sturdivant, managing member of The ABC Squared.
Overall, the market seems far less certain that some of the most bullish year-end forecasts will be achieved. Crypto bulls like Tom Lee and HSBC’s Geoff Kendrick have bitcoin price targets around $200,000, meaning the crypto would need to embark on a rally of 100% in less than two months.
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“With trade headwinds on the horizon, less certainty about future rates, and uncertainty as to how the government shutdown will impact this month’s economic numbers, buyers don’t have enough data to underwrite market entry points at $120K anymore,” said Guillermo Fernandes, founder of analytics firm Blockpliance.
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