Bitcoin (CRYPTO: BTC) is down 30% from its all-time high, but the nature of the decline points to a structural, mechanical breakdown rather than a deterioration in fundamentals.

A $1.1 Trillion Market Collapse

In a detailed X post, market commentator The Kobeissi Letter noted that the crypto market has erased roughly $1.1 trillion in value over the last 41 days, averaging a staggering –$27 billion per day. Prices now sit 10% below the levels seen during the historic Oct. 10 liquidation flush.

The slide began with heavy institutional outflows in late October, followed by another $1.2 billion in crypto fund redemptions in early November.

This wave of selling collided with crypto’s extreme leverage structure, where 20x–100x margin is common.

Derivatives-Driven Spiral: Liquidations Fuelling Liquidations

At 100x leverage, a 2% move is enough to vaporize entire positions. That reality has turned minor dips into cascading liquidation events.

• Oct. 10: $19.2 billion in liquidations — Bitcoin’s first-ever $20,000 daily candle.
• Since then: Liquidations regularly exceed $500 million and often surpass $1 billion per day amid thin liquidity and elevated open interest.

This feedback loop of overleverage has also crushed sentiment. The Crypto Fear & Greed Index has collapsed to 10 (Extreme Fear), matching the February 2025 lows, even though BTC is still 25% higher year-over-year.

Gold vs. Bitcoin: Correlation Breaks

Bitcoin has sharply decoupled from gold, its strongest macro pair for over a year, underperforming the metal by 25 percentage points since the October crash.

Also Read: Bitcoin At $95,000, Ethereum, XRP, Dogecoin Drops 2% Flat On ‘Extreme Fear’ Sentiment

Why It Matters: Data increasingly shows the market is not breaking due to fundamentals, but because of structural leverage unwinds, mechanical selling, and ETF-driven outflows. The core value thesis of crypto continues to strengthen even as markets reset.

As these pressures exhaust, the setup points toward the market approaching a cyclical bottom.

The damage outside Bitcoin is even steeper:

• Ethereum: –8.5% year-to-date and –35% since Oct. 6, placing it firmly in bear-market territory despite strength in global risk assets.

Read Next: