This week, the Bitcoin market suffered its most severe one-sided decline since March, with the price plummeting from around $107.5k to a low near $93k, registering a weekly drop of 10%, completely erasing all gains made in 2025. Accompanying this crash, the market's Fear Index hit a three-year low, pushing the entire cryptocurrency community to the brink of extreme panic.
For every investor, in the midst of market sentiment collapse, it is more important to rationally analyze the structural causes behind this extreme sell-off and formulate a response strategy than to trade blindly. This article will deeply analyze the current market situation from three core dimensions: macro environment, on-chain structure, and capital flow.
I. Macro Alarm: Bitcoin's High-Risk and High-Beta Attributes Exposed
This Bitcoin crash is not an isolated incident but a sensitive reaction to the tightening macro liquidity environment.
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Risk Correlation Surges: BTC's Small-Cap Tendency
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Striking Data: The 30-day correlation between Bitcoin and the Russell 2000 Index (which represents US small-cap stocks) soared to an all-time high of 0.95.
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Meaning: This extremely high correlation indicates that, in the eyes of institutions, Bitcoin is being treated as a typical high-risk, high-volatility "small-cap, high-beta asset." Against the backdrop of uncertainty regarding the Fed's rate path and strained macro liquidity, high-beta assets naturally become the primary targets for liquidation when capital risk appetite is extremely cautious.
Macro Liquidity Strain: External Drivers of the Sell-off
The failure of the US government shutdown resolution to sustain improved risk sentiment, along with persistent uncertainty over the Fed's monetary policy, continues to pressure risk assets globally. The cryptocurrency market, as the tail end of the risk asset chain, naturally amplified the macro pressures.
II. On-Chain Structure Analysis: Historic Capitulation and Supply Vacuum
On-chain data reveals the brutal extent of this Bitcoin crash, while also providing clues for identifying a potential bottom.
Short-Term Holder (STH) "Capitulation Moment"
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Loss Realized Intensity: When Bitcoin fell below $95,000, the STH Realized Profit/Loss Ratio dropped to 0.0009, meaning over 99.9% of realized value came from selling at a loss.
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Historical Level: The intensity of this capitulation has exceeded the three previous major shakeouts of this cycle, ranking among the top five historical capitulation moments.
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Investment Insight: This type of extreme panic sell-off usually signals that passive selling pressure (forced sales due to losses or margin calls) is being concentrated and rapidly exhausted. From a contrarian perspective, the accelerated depletion of selling pressure is a necessary precursor to market stabilization.
Token Structure Reconfiguration and Vacuum Zone
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Vacuum Zone Formed: Tokens in the $70k–$93k range were sold off en masse, forming a distinct "token vacuum zone." This indicates that selling pressure from cost tokens below has significantly diminished as profit-takers in this range have largely exited.
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Pressure Shift: The primary market pressure has now fully shifted to the over-the-head supply in the $100k–$112k range. The pace at which these loss-making tokens (from short-term holders) are released will determine the difficulty of the subsequent recovery.
Risk Signals from Long-Term Holders (LTHs)
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LTH Selling: Since October 10, long-term holders have sold approximately 180,000 BTC. Although less intense than the July sell-off, the fact that LTHs are resuming large-scale selling is a clear signal that selling pressure is contributing to the downward price action.
III. Capital Flow: Retreat of Core Buying Power
The failure of the cryptocurrency market's core sources of incremental funding—ETFs and public companies—to step in is closely linked to the price decline.
Continuous Outflow from ETFs
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Institutional Retreat: Bitcoin ETFs have shown net outflows for three consecutive weeks, with the cumulative net outflow reaching $3.6 billion over the last four weeks.
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Impact: The shift to negative buying from the ETF sector, a key source of incremental capital, reflects institutional caution toward crypto assets and is a quantified expression of market liquidity tightening.
Sharp Contraction in Public Company Buying Intent
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Buying Power Wanes: Public companies (DATs) have recorded only $320 million in net inflows so far in November, a drastic reduction compared to $5.57 billion in July. This week even saw the first net outflow.
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Confidence Signal: This trend, coupled with several major DAT companies seeing their market capitalization fall below the net value of
Investment Analysis and Strategy Guide
How Should Investors Respond to the Extreme Sell-off?
Stay Calm, Monitor Capitulation Intensity (Short-Term Strategy):
Avoid Catching Falling Knives: Attempting to catch the "falling knife" during a high-beta asset crash is extremely risky.
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Watch for Stabilization Signals: Focus on whether the pace of STH selling visibly slows down. Extreme capitulation suggests a bottom is near, but the right time to enter should wait for signals of buying power recovery or effective price stabilization above support levels.
Identify Key Technical Resistance (Short-Term Risk Management):
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$99.5k USD is the crucial short-term resistance level. Until Bitcoin successfully holds above $99.5k, the bearish trend will be difficult to reverse, and any rally will likely meet selling pressure from the overhead supply.
Adhere to Long-Term Strategy, Utilize Fear (Long-Term Strategy):
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DCA Strategy: For long-term investors who believe in the enduring value of Bitcoin, Dollar-Cost Averaging (DCA) in small, regular increments during periods of extreme fear and token clearance is a robust strategy for lowering the average cost and capturing long-term value.
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Monitor Capital Flow: The question of whether the market will descend into a deeper, prolonged bear market hinges on the return of ETF and public company buying, and the improvement of the macro liquidity environment.
Conclusion: This Bitcoin crash is a structural shakeout triggered by macro factors and amplified by on-chain panic. While the Fear Index hitting new lows suggests the short-term selling pressure may be concluding, the lack of funding support and ongoing macro liquidity pressure are major hurdles. Patience, waiting for stabilization signals, and adhering to a long-term DCA strategy are the most rational approaches to navigate the current extreme market.
