Bitcoin tumbled below $91,500 on Monday, deepening a selloff that has wiped out all its year-to-date gains, while the total crypto market capitalization free falls at least 30% since October 6.
Summary
- Traders are increasingly betting on continued declines in Bitcoin, with a surge in demand for downside protection, particularly around key levels like $90,000, $85,000, and $80,000.
- A sentiment index shows “extreme fear” in the market, while corporate crypto treasuries face pressure to sell assets to protect balance sheets. El Salvado, meanwhile, added 1,091 Bitcoin, worth over $100 million, during the market dip.
- Economic factors, including Nvidia’s earnings report and potential Federal Reserve interest rate cuts, are dampening risk appetite.
In the options market, traders are increasingly betting on further declines, convinced the downturn is far from over as wealthy buyers retreat, Bloomberg reported.
The shift in market sentiment has been rapid and decisive. Demand for downside protection — particularly at levels like $90,000, $85,000, and $80,000 — has surged.
Options set to expire later this month are seeing especially high volumes, according to data from Coinbase-owned Deribit. After riding Bitcoin’s highs just weeks ago, traders have now purchased more than $740 million in contracts betting on continued drops, far outpacing interest in bullish bets.
Social Media Response
Most commentators on X (formerly Twitter) seemed to agree that the week was off to a messy start.
The pain has been most acute for digital-asset treasuries — firms that accumulated large amounts of crypto earlier this year to make crypto-backed bets in the stock market.
While Michael Saylor’s Strategy Inc. recently bought an additional $835 million in Bitcoin, some of his corporate peers are under increasing pressure to liquidate assets to safeguard their balance sheets.
This selling has created a psychological barrier: a market filled with investors too deep in the red to buy more, yet hesitant to cut their losses.
A sentiment index from CoinMarketCap, which tracks price momentum, volatility, and derivatives, shows crypto participants are currently in a state of “extreme fear.”
The fear index fell to 9, its lowest reading since July 2022.
El Salvador, meanwhile, added 1,091 Bitcoin, valued at over $100 million, to its growing crypto reserves as part of its ongoing strategy to accumulate the asset during market dips. Since making Bitcoin legal tender in 2021, the country has consistently purchased Bitcoin in downturns, aiming to build a long-term digital asset treasury.
With this latest acquisition, El Salvador now holds a total of 7,474 BTC, worth approximately $688 million, further solidifying its position as one of the largest Bitcoin holders among nations.
Broader Economic Factors
Traders are looking to Wednesday’s earnings report from Nvidia Corp., a key indicator for tech and speculative assets, as well as shifting expectations for a potential interest-rate cut from the Federal Reserve in December.
The S&P 500 fell over 1%, dampening the mood for risk assets across the board. Ethereum’s token, Ether, has been particularly vulnerable, dropping to $2,975 and seeing a 24% decline since early October.
The broader market has been struggling since a sharp liquidation wave in early October wiped out around $19 billion in digital assets. Open interest in crypto futures has declined, especially in smaller tokens like Solana, where positioning has halved, according to Coinglass data.
