Cryptocurrency Market Continues Downward Spiral
The cryptocurrency market extended its decline for more than a month during Thursday's trading session, with Bitcoin dropping below the crucial $87,000 mark. This significant downturn occurred simultaneously as stock markets surrendered their earlier gains, creating a bearish atmosphere across financial markets.
Market leader Bitcoin experienced a sharp decline of more than 4%, falling below $87,000 for the first time since April. The digital asset struggled to attract new buyers while the momentum that had supported prices earlier this year completely evaporated.
Whales Drive Selling Pressure
According to James Butterfill, head of research at CoinShares, crypto is suffering from heavy selling by whales who follow the four-year cycle narrative. He noted that this typically marks the point in the cycle where prices decline significantly. Large cryptocurrency holders have sold more than $20 billion since September, creating substantial downward pressure on prices.
Butterfill explained that while his firm doesn't subscribe to this view from a fundamentals perspective, it has become somewhat self-fulfilling as major investors continue to offload their holdings.
Stock Market Correlation and Federal Reserve Concerns
The cryptocurrency downturn coincided with volatility in traditional stock markets. Stocks had initially surged on renewed AI enthusiasm following positive results from Nvidia Corp., but those gains quickly disappeared. Wall Street faced uncertainty due to concerns about artificial intelligence valuations and doubts about the Federal Reserve's ability to cut interest rates in December.
Jake Ostrovskis, head of over-the-counter trading at Wintermute, highlighted that uncertainty lingers over how the Federal Reserve will set policy in the current data vacuum. This uncertainty is suppressing investors' willingness to take on risk, which is most evident in riskier assets like cryptocurrencies.
The current crypto market situation represents a self-contained purge of leverage and fading retail demand. This cross-asset split has been deepening since early October, separating cryptocurrency performance from traditional market movements.
Options Traders Eye Key Support Levels
As the slump continues, options traders are closely watching the $85,000 threshold for Bitcoin. Data from Deribit, the Coinbase-owned crypto exchange, shows that downside protection around the $85,000 level has received the highest demand, followed by $82,000.
Bloomberg strategist Brendan Fagan described the situation dramatically, stating that crypto's implosion has stripped away one of the market's main speculative outlets. He characterized the current environment as one where crypto is no longer the canary in the coal mine but the coal mine itself, collapsing under the weight of its own leverage.
The current Bitcoin slide cannot be separated from October's violent liquidation cascade, when more than $19 billion in leveraged positions were forced out in a single session. That shock broke market momentum and hollowed out liquidity across major trading venues. Order books never fully recovered, leaving prices hypersensitive to modest trading flows—a fragility that continues to define every downward movement.
At 5 p.m. in New York on Thursday, Bitcoin was trading below $87,200, confirming the sustained bearish trend that has worried investors and traders alike.
