The cryptocurrency market stumbled into November, with the flagship digital asset, Bitcoin, plunging below the psychologically critical $100,000 mark to its lowest level since late June.

This sharp correction, which has seen Bitcoin shed over 20 per cent from its record high above $126,000 set on October 6, has ignited a fierce debate among analysts: is this a healthy pullback or the beginning of a more profound bear market?

The immediate triggers for the decline are a confluence of technical breakdowns, shifting macroeconomic winds, and internal market dynamics. Technically, the breach of a key support level - the 200-day moving average at $109,800 - has signalled further downside potential.

Stay up to date with the latest news. Follow KT on WhatsApp Channels.

"From a technical perspective, Bitcoin's correction phase is likely to persist for several more weeks,” noted Katie Stockton, founder of Fairlead Strategies. She identifies the next significant support level around $94,200, while maintaining a long-term price target of $134,500 once the correction exhausts itself.

Macroeconomic pressures have also intensified. Amid diverging opinions among Federal Reserve officials, the US dollar has strengthened, creating headwinds for risk assets like cryptocurrencies.

The hawkish rhetoric from several Fed officials, suggesting another rate cut in December is not a foregone conclusion, has caused a significant shift in investor sentiment toward defensive positioning. This was reflected in cryptocurrency investment products, which recorded a net outflow of $360 million last week, according to CoinShares' head of Research, James Butterfill.

Compounding these external factors are concerning shifts within the crypto ecosystem itself. Paul Howard, a director at crypto trading firm Wincent, observed that the robust summer demand from ETF investors and corporate treasuries has faded,“replaced by long-term wallets offloading their holdings.”

This sentiment is echoed by on-chain data. Charles Edwards, founder of Capriole Investments, highlighted a critical development:“For the first time in seven months, institutional net buying has dropped below the daily mining supply.” This indicates that the rate of new Bitcoin entering the market is now outstripping institutional demand, a potential warning sign that large buyers are stepping back.

Data from blockchain analytics platform Glassnode confirms this slowdown. Institutional accumulation has dramatically decelerated, with Blackrock's spot Bitcoin ETF seeing weekly net inflows shrink to less than 600 Bitcoins, a far cry from the over 10,000 Bitcoins per week seen during previous major rallies.

This represents one of the weakest periods of institutional demand since the ETF's launch. Furthermore, transfers of large Bitcoin holdings to exchanges, such as a recent movement of 1,198 Bitcoins to Coinbase, suggest that long-term holders are taking profits. While such moves can be for custody reallocation, they underscore that large institutions are actively managing their exposure in a volatile environment.

However, a contingent of analysts argues that the market's underlying structure remains resilient.

Singapore-based QCP Capital posits that the pullback is less about macro factors and more about profit-taking by long-term holders after an extended rally. They point out that the market has absorbed significant selling pressure - approximately 405,000 long-held Bitcoins moved in the past month - without a catastrophic collapse below key levels, noting that leverage is low and funding rates stable.

Despite the immediate gloom, the long-term investment case for Bitcoin is far from abandoned. Gary O'Shea, head of Global Market Insights at asset manager Hashdex, stressed,“We do not view today's price action as a sign of a weakening long-term investment case for bitcoin.” He cites accelerating institutional adoption as a key reason Bitcoin could still climb to a new all-time high in the coming months.

The current downturn presents a critical test for the new market structure built around spot ETFs and institutional participation. While this structure may have slightly reduced volatility, as one analyst noted, 'resilience does not equate to reversal.' The path forward likely hinges on a positive shift in the macro environment and a return of institutional demand.

Analysts insist that for now, the market holds its breath, watching to see if the $100,000 level can hold and prevent a wider cascade of panic selling, or if the perfect storm of factors will push Bitcoin into a deeper correction.

MENAFN05112025000049011007ID1110301017