Bitcoin Plunges 17.5% Amid DeFi Crisis, Market Sell-Off

Bitcoin’s dramatic descent below $104,000 represents a significant reversal from its early October peak, with the world’s largest cryptocurrency trading at $103,849 at publication time—down 3.2% on the day and 17.5% from its record high. The sell-off extended across major altcoins, with Ethereum, XRP, BNB, and Solana posting 24-hour losses ranging between 5% and 9%, indicating a broad-based cryptocurrency market retreat rather than isolated Bitcoin weakness.

The market carnage triggered massive liquidations, with CoinGlass data showing $1.37 billion in crypto positions liquidated over the past 24 hours. Market sentiment deteriorated sharply, as evidenced by the annualized futures premium on major exchanges dropping from approximately 7% to below 4% over the past week, according to Velo data. This compression in futures premiums signals reduced investor appetite for bullish leveraged positions amid growing uncertainty.

Prediction market data from Myriad, launched by Decrypt’s parent company Dastan, captured the dramatic sentiment shift. The platform’s Greed index dropped from 59% on November 1 to 51.9%, while users placed a 71% probability of Bitcoin’s next move taking it to $100,000 rather than $120,000—a significant increase from the 44% bearish probability recorded on November 3.

The immediate trigger for the market downturn stems from a crisis of confidence in the decentralized finance sector, according to Derek Lim, Head of Research at market-making firm Caladan. The situation escalated when DeFi protocol Stream Finance disclosed $93 million in fund asset losses Monday morning, exacerbating existing vulnerabilities in the ecosystem. Lim noted that ‘total bad debt across lending markets is estimated at $284 million,’ creating systemic concerns.

Lim explained that the Stream Finance disclosure triggered ‘contagion fears spreading through DeFi,’ with multiple stablecoins and vaults facing exposure and forced redemptions. The current crisis follows a series of prior incidents that had already weakened market confidence, including the recent $128 million Balancer exploit and the lingering impact of October’s historic liquidation event. ‘Confidence was already shot before Stream imploded,’ Lim told Decrypt, emphasizing that ‘any catalyst is going to amplify the risk-off’ in a system that still contains very high amounts of leverage.

Beyond the internal DeFi crisis, traditional macroeconomic concerns amplified the selling pressure. Ryan Lee, Chief Analyst at Bitget, told Decrypt that ‘the ongoing crypto market crash reflects a market-wide de-risking or risk-off sentiment as traders unwind leveraged positions amid macro uncertainty.’ Lim highlighted several key macro factors driving the risk-off move, including weak U.S. jobs data, a seemingly more hawkish Federal Reserve stance, and renewed uncertainty around potential U.S. government shutdown.

The confluence of crypto-specific and traditional market concerns created a perfect storm for digital assets. ‘Risk assets are getting dumped across traditional and crypto markets,’ Lim observed, with bond market volatility further unsettling investors seeking safe havens. This synchronized risk-off movement across asset classes demonstrates cryptocurrency’s growing correlation with traditional financial markets during periods of macroeconomic stress.

Despite the short-term pain, analysts see potential benefits from the current market correction. Bitget’s Ryan Lee suggested that ‘this kind of flush-out often resets valuations, paving the way for stronger, more sustainable accumulation once liquidity and sentiment stabilize.’ The forced liquidation of over-leveraged positions could create healthier market foundations by removing excess speculation from the system.

The path to stabilization, according to analyst assessments, appears contingent on two key developments: containing the DeFi contagion and achieving greater clarity on the macroeconomic front. While near-term volatility is expected to persist, the current reset may ultimately support more organic growth once the leverage excesses are purged and both internal crypto issues and external macro concerns show signs of resolution.