Bitcoin News Update: Imminent Structural Shift as Bitcoin Faces Increasing Liquidity Challenges

Bitcoin Faces Steepest Decline Since 2022 Amid Liquidity Crunch

Bitcoin has experienced a sharp 30% drop from its October highs, drawing parallels to the significant correction Google faced in 2017. According to strategist Raoul Pal, the cryptocurrency is undergoing a similar phase of liquidity adjustment. By late November, Bitcoin was trading at $87,080, pressured by a combination of record ETF withdrawals, shrinking stablecoin reserves, and rapid unwinding of leveraged positions.

This combination of factors has led to Bitcoin's most pronounced two-month slide since mid-2022, even as it performed better than the S&P 500, which fell by 2.5%, and the Nasdaq, which declined by 4% during the same period.

Institutional Outflows Intensify Downturn

The downturn has been exacerbated by changing institutional strategies. In November alone, Bitcoin ETFs saw $3.5 billion in outflows—the largest since February. Major funds such as iShares Bitcoin Trust (IBET) and Grayscale's GBTC experienced consecutive days of redemptions, indicating that large investors are pausing their accumulation. This trend followed a massive $19 billion leveraged liquidation event on October 10, which halted Bitcoin’s upward momentum and established a new resistance zone between $98,000 and $102,000. Analysts now estimate that Bitcoin would need about $1 billion in new weekly inflows to recover just 4% of its value, a figure that far exceeds current demand.

Liquidity Dries Up Across Crypto Markets

Liquidity signals throughout the crypto sector are weakening. Since November 1, stablecoin market capitalization has dropped by $4.6 billion, with $800 million leaving the market just last week. This decline is a stark contrast to previous cycles, where growth in stablecoins often preceded major rallies. Issuance of USDT, USDC, and DAI has also fallen, coinciding with a 40% reduction in average daily spot trading volume on centralized exchanges, now below $25 billion. This thinning liquidity leaves Bitcoin more susceptible to sudden price swings.

Mixed Signals from Bitcoin Holders

Blockchain data shows that some investors are taking advantage of lower prices. The number of wallets holding at least 100 BTC—often referred to as "whales"—has increased by 0.47% since November 11, adding 91 new large holders. This could indicate that some are accumulating in anticipation of a market bottom. Nevertheless, overall market sentiment remains cautious, with institutional confidence shaken by broader economic uncertainty and the appeal of higher yields in traditional markets.

Looking Ahead: Will Bitcoin Recover?

Although short-term volatility is expected to persist, this correction could pave the way for a more stable foundation. If stablecoin liquidity finds a floor and institutional investors return, Bitcoin may attempt to reclaim previous resistance levels. For now, the market’s trajectory hinges on whether new capital inflows can offset the ongoing outflows—a scenario reminiscent of Google’s 2017 transition from speculative hype to more sustainable growth.