Cryptoshock: what is behind the collapse of Bitcoin and the crisis of trust

Bitcoin is experiencing perhaps one of the most dramatic moments in the history of its existence. On the night of November 5, the leading cryptocurrency collapsed to an all—time low of just $98,962, according to CoinMarketCap. The massive wave of liquidations on exchanges has affected more than half a million traders worldwide. For more information about what caused the sudden collapse and whether this is really the beginning of the end of the digital gold era, see the Izvestia article.

The fall of the crypt: What happened

Since the beginning of the week, starting on November 3, the cryptocurrency market has been experiencing a sharp decline, losing tens of billions of dollars in capitalization. On the morning of November 4, the bitcoin exchange rate dropped by more than 6%, and Ethereum (ETH) fell by 11%, falling below the $3,500 mark.

On the night of November 5th, bitcoin broke through an important psychological milestone. Its price dropped below $100,000 for the first time in a long time. At the minimum of trading, the value of the first cryptocurrency reached $ 98,962, after which it partially recovered to $ 101.76 thousand. Despite this, the indicator remains 4.69% below the starting mark of the trading day.

The sharp decline in bitcoin caused a massive drop across the entire crypto market. According to CoinMarketCap, over the past 24 hours, the total capitalization of digital assets has decreased by more than 8% to $3.45 trillion, which corresponds to the levels of early October. More than 95% of cryptocurrencies from the top 100 showed negative dynamics, losing on average over 20% of their value. The largest drop was recorded for Aster DEX (ASTER), whose exchange rate decreased by 22%.

However, against the background of a general decline, several assets were able to demonstrate growth. Among them are the confidential cryptocurrencies Monero (XMR), Zcash (ZEC) and Dash (DASH), which added 1%, 16% and 50% respectively. Analysts attribute investors' interest in these assets to increased attention to anonymous transactions. Over the past month, ZEC and DASH quotes have increased by 180% and 280%, which confirms the steady demand for private digital solutions even in the face of a general market downturn.

There are many reasons, but the essence is the same

The sharp drop in the value of bitcoin was the result of a combination of global economic and market factors. Experts attribute the current decline to increased uncertainty in financial markets, changes in US monetary policy, and technical signals of a weakening of the cryptocurrency sector.

One of the key factors was the strengthening of the US dollar after Federal Reserve Chairman Jerome Powell stated that the December key rate cut was "not guaranteed." These words cooled investors' expectations regarding a soft monetary policy and provoked the strengthening of the US currency. In such conditions, the demand for risky assets, including cryptocurrencies, is naturally decreasing.

Technical factors also played an important role. In recent weeks, bitcoin has broken through a number of key support levels, including the 200-day moving average, which has caused alarm among market participants. Bearish patterns have formed on the charts, such as the "death cross" and "head and shoulders", which traditionally signal a further weakening of the trend. This increased the pressure from sellers and triggered a wave of liquidations of positions of traders trading with high leverage.

According to analytical platforms, billions of dollars worth of positions were liquidated in a few hours, which exacerbated the decline. With reduced liquidity and the absence of large buyers, even relatively small sell orders lead to an avalanche of price declines. At the same time, there is an outflow of funds from spot ETFs for bitcoin and ether, which signals a temporary cooling of interest from institutional investors. It is their activity that has become one of the growth drivers of the crypto market in recent months.

The general correction in global financial markets also exerted additional pressure. The US technology sector, which is closely linked to the digital asset market, is also experiencing a downturn. Against this background, the correlation of bitcoin with Nasdaq stocks has increased, and the cryptocurrency has once again begun to react to fluctuations in stock indices, losing its status as a "digital haven."

The current drop followed an impressive rise. So, in October, bitcoin updated its historical maximum, exceeding $126,000. However, the following weeks showed that the market was overheated, and some investors decided to lock in profits. In fact, the current decline is a phase of deep correction after rapid growth.

We found a loophole

One of the few notable negative news in recent days has been the hacking of one of the oldest decentralized finance (DeFi) protocols, Balancer. According to the information provided by the analytical platforms, the attackers exploited a vulnerability in the smart contract and withdrew about $128 million in various crypto assets. As a result, several networks related to the protocol were affected, including Berachain, where the developers temporarily suspended the work of the blockchain to eliminate the consequences.

Despite the fact that this incident was the largest hacking of DeFi platforms in recent months, experts agree that it could not have been a direct cause of the global market decline. However, the events around Balancer have once again reminded investors of the systemic risks in the decentralized finance sector, where even time-tested protocols remain vulnerable.

Meanwhile, more and more alarming signals are coming from other projects. The Chinese edition, citing journalist and analyst Colin Wu, announced the suspension of the Stream Finance DeFi protocol. According to the developers, the platform froze the deposit and withdrawal of funds after the external management fund lost assets worth about $93 million. The internal stablecoin of the XUSD project collapsed by more than 50% in a day, which caused panic among token holders.

Such incidents emphasize that the problems of the crypto market are not limited to fluctuations in the bitcoin exchange rate. Breach of trust in the DeFi infrastructure, massive liquidity leaks and inefficient asset management can create hidden pressure on the market. Such processes are gradually eroding investor confidence and increasing the instability of the entire crypto sector.

Next to Gold: Bitcoin's Long-Term Prospects

Despite the short-term turbulence, analysts remain cautiously optimistic. According to Deutsche Bank experts, bitcoin as a whole repeats the historical trajectory of gold and may become part of the reserves of the world's central banks in the future. So, by 2030, there is a high probability that cryptocurrency will take a stable place in the global financial system.

Key arguments in favor of such a scenario include reducing bitcoin's volatility to historically low levels even against the backdrop of rising prices, limited issuance (only 21 million BTC), and the potential attractiveness as a safe haven asset. At the same time, Deutsche Bank emphasizes that bitcoin will not replace the US dollar as a reserve currency, but rather will become an "addition" to gold.

As for price forecasts, there is a wide range of opinions. A year ago, analysts believed that by the spring of 2026, bitcoin could reach $200,000, and by 2030, with a more favorable combination of factors, $1 million. However, given the current long-range performance, the bitcoin market has two paths.

Today, the bitcoin market sees two possible paths, either it will go through a correction period, forming a more mature and stable base, or it will lose some of its previous momentum. In the coming years, the key factors determining the fate of bitcoin will be increased institutional interest, regulation of crypto assets, and macroeconomic trends. Their development will determine whether bitcoin will truly become "digital gold" or turn back into a high-volatility instrument.