Bitcoin was trading at $66,990 during the preparation of this report, having declined to approximately $66,600 on Binance‘s BTC/USDT pair on November 13. This slide marked its lowest level since August 19, accompanied by the seventh consecutive day of outflows from U.S. spot Bitcoin ETFs.
Altcoins and Futures See Massive Liquidations
Ether experienced a roughly 2% decline, falling to around $1,890, and even dropped to $1,880 earlier in the day. Meanwhile, XRP shed about 1%, dipping below the $1 mark. Solana fell below $75 but managed to recover some losses, despite marking a 4% drop over 24 hours. During the sell-off, more than $330 million in futures positions were liquidated within just two hours.
Rising inflation fears in the U.S. bolster concerns of a more aggressive Fed tightening monetary policy.
As U.S. bond yields rise and the dollar strengthens, cryptocurrencies are under pressure. Contributing to market unease are changes in Nvidia’s leadership and volatility in AI-linked stocks, which have also dampened investor sentiment. Jeff Mei, COO of BTSE, highlighted that while markets anticipate a 25 basis point rate hike, a 50 basis point move could compound losses in cryptocurrencies.
Outflows from Bitcoin ETFs and Mounting Fear Index
Data from Farside shows that U.S. spot Bitcoin ETFs recorded net outflows of $185.4 million on November 13. Since October 30, these funds have seen net outflows exceeding $2.5 billion.
Alternative’s Crypto Fear and Greed Index dropped to 12 on November 14 from the prior day’s level of 20. This index, calculated using metrics like volatility, trading volume, and search trends, has stayed within the extreme fear zone for several days now.
Strategy’s Significant Unrealized Losses
According to a filing with the SEC on November 9, Strategy reported holding 850,364 BTC as of November 8. The total acquisition cost, including fees, was approximately $64.16 billion, with an average cost of $75,456 per Bitcoin.
When Bitcoin was priced at $67,400, Strategy faced unrealized losses of around $6.85 billion. Given the report’s $66,990 valuation and stated costs, these unrealized losses have expanded to roughly $7.19 billion. At this price, the market value of its reserves is approximately $56.97 billion. The company purchased 1,036 BTC between November 2-8 with $81.9 million raised from stock sales, at an average price of $79,012 per Bitcoin.
Sharpest Drop in Mining Difficulty
Bitcoin mining difficulty registered a significant 9.13% decrease, sliding from 148.36 T to 134.82 T, marking the sharpest fall since the 10.09% drop on June 14. Difficulty had previously increased by 5.92% and 5.54% on October 16 and 29, respectively.
The mining difficulty, which updates about every two weeks, adjusts based on the total network computational power. It rises when computational power increases and falls when it decreases.
This means miners who cannot cover costs with Bitcoin’s price drop may shut down their rigs.
A slowdown in ETF outflows could support a recovery if Bitcoin surpasses $67,000. However, anticipation of a more aggressive Fed rate hike might trigger additional liquidations in futures markets, complicating a rebound in Bitcoin and altcoins.
