From Record Highs to “Extreme Fear” Engulfing the Bitcoin Market

Bitcoin, which has led the cryptocurrency market throughout 2025, plunged during Asian trading hours on November 17, failing to hold the key psychological level of $100,000. At one point, the price fell below $93,714, dropping beneath its closing level at the end of 2024. This means it has now fallen even lower than the market level seen late last year, when risk assets surged following President Trump’s election victory—and that the more than 30% gains accumulated since the beginning of this year have now been completely erased.

Just over a month earlier, on October 6, the market had surged to an all-time high of $126,251 amid frenzied enthusiasm. The rapid reversal from this peak has dramatically worsened market sentiment. As major cryptocurrencies continued to decline for over a week, the “Fear & Greed Index,” which measures market sentiment, dropped to 10—signaling “Extreme Fear,” the lowest level since late February 2025. The CoinDesk 20 Index (CD20), a broad indicator of overall market performance, also fell 5.8% over the past week, reinforcing the view that this crash is not a mere correction, but a total capitulation triggered by the breakdown of the final psychological support at $100,000.

ETF Inflows Dry Up: A Market Left Without Its Main Driver

The bull market of 2025 had a clear protagonist: institutional investors entering the market primarily through Bitcoin exchange-traded funds (ETFs). According to Bloomberg data, ETFs attracted over $25 billion (approx. ¥3.86 trillion) in inflows since the start of the year, pushing their total assets under management to around $169 billion. This steady inflow was the key force underpinning Bitcoin’s narrative as a hedge against inflation and political instability—its role as “digital gold.”

However, in the month between October’s all-time high and the subsequent crash, this market structure changed quietly but fundamentally. The “major buyers,” including ETF managers, gradually retreated, and the abundant inflows that supported the early-year rally dried up. Institutional investors had aggressively accumulated Bitcoin during its rise, but as macroeconomic uncertainty increased and the surge in tech stocks stalled, they were the first to sell.

This behavior highlights that institutions were treating Bitcoin not as a true “hedge asset,” but simply as a high-risk speculative asset. The fragility of the narrative that Bitcoin’s 2025 rally was driven by institutional adoption as a hedge has now been exposed. With that pillar removed, the market lost its strongest source of support.

Reversal of “Trump Optimism” and Heightened Macro Uncertainty

Two major external factors pushed institutional investors into risk-off mode. First, political risk was reassessed. The market rally that had continued since late 2024 was partly supported by enthusiasm for the Trump administration’s perceived crypto-friendly stance. However, this enthusiasm cooled rapidly after October 10, when President Trump made an unexpected comment regarding tariffs, triggering global market turmoil. The fact that Bitcoin’s decline began on this very day suggests that the market started to prioritize macroeconomic concerns—such as global instability—over the narrower expectation of a pro-crypto administration.

Second, macroeconomic uncertainty intensified. Market expectations for a Federal Reserve rate cut this month weakened. To make matters worse, the White House signaled that key economic data—including October inflation—might not be released due to the impact of the recently resolved government shutdown. This means the market lost its “compass” for predicting the Fed’s next moves. Without data to guide them, traders were forced to assume worst-case scenarios, accelerating outflows from risk assets.

Chain Reaction of Selling: Crypto as the “Canary in the Coal Mine”

The crash on November 17 was not triggered by a single factor. As Jake Kennis, Senior Research Analyst at Nansen, pointed out, it was the catastrophic result of multiple factors colliding.

First, long-term holders began taking profits near record highs amid rising macro uncertainty.
Second, seeing this, institutional investors (ETFs) began withdrawing funds.
Third, these large-scale sales hit a market still lacking liquidity after the October decline, accelerating the drop.
Finally, the plunge triggered a cascade of forced liquidations of leveraged long positions accumulated during the year’s rally, causing a panic-driven downward spiral.

Matthew Hougan, CIO of Bitwise Asset Management, captured the situation succinctly: “The entire market is in risk-off mode. Crypto was like the canary in the coal mine—it was the first market to react.”

This Bitcoin crash is not an isolated issue within the crypto sector. Rather, it should be regarded as the “first alarm bell” signaling that institutional investors are beginning to pull capital out of global risk assets—including tech stocks.