Bitcoin is facing a significant test of its resilience. The asset has surrendered nearly 30% of its value since its peak in October, with its price now struggling to stabilize around $87,740. This marks the first time since April 2025 that it has traded below the psychologically significant $90,000 threshold, erasing close to $40,000 in valuation and putting investor nerves to the test with its high volatility.
The Macroeconomic Squeeze
At the core of this substantial sell-off is a shifting monetary policy landscape. The Federal Reserve’s hesitation to implement rapid interest rate cuts, driven by persistent inflation worries, is creating a toxic environment for risk assets. This uncertainty about the future path of interest rates is causing investors to act with increased caution, pulling capital away from speculative markets.
The change in sentiment is starkly visible in institutional flows. Data indicates that approximately $4.7 billion was withdrawn from crypto-focused ETFs in November alone. This capital flight underscores a dramatic pivot from the post-election euphoria, dubbed the “Trump-Trade,” to a climate dominated by fear. The correlation with technology stocks, such as Nvidia, has further exacerbated the downturn, as investors take profits in that sector as well.
Should investors sell immediately? Or is it worth buying Bitcoin?
A Glimmer of Hope in the Data
Despite the prevailing panic, certain on-chain metrics are sending a surprisingly bullish signal. The “Value-to-Transaction” ratio has plunged to a level of -1.6. Historically, this reading has frequently indicated that the asset is undervalued, potentially flagging a buying opportunity for contrarian investors. Throughout this price turmoil, the underlying Bitcoin network has continued to operate with stability.
Adding to this perspective, technical analysts are pointing to the current “capitulation volume.” Their models suggest that three consecutive red candles accompanied by high trading volume have often marked the conclusion of a corrective phase in the past. The bull case rests on the idea that market sentiment has become so pessimistic that the selling pressure may soon be exhausted.
The Path Forward
The battle between bearish and bullish forces is intense. While macroeconomic headwinds, particularly interest rate anxiety, continue to exert downward pressure on the price, fundamental on-chain indicators are painting a picture of an oversold market. For investors, the situation presents a critical juncture. The immediate future will be decisive in determining whether the bears are about to lose their grip or if the crypto market is poised for a brief return to winter-like conditions.
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