The cryptocurrency market extended Monday’s losses on Tuesday morning as Bitcoin slipped below $104,000, dropping to levels not seen since late June.

At time of publication, the price of Bitcoin is $103,849, down 3.2% on the day, per data from CoinGecko.

The sudden drop stems from a combination of a deepening DeFi crisis and persistent macroeconomic fears that have triggered a broad risk-off move, analysts told Decrypt.

Bitcoin is now down 17.5% from its record high set in early October. The sell-off has spread across major altcoins, with Ethereum, XRP, BNB, and Solana posting 24-hour losses of between 5% and 9%.

Crypto liquidations over the past 24 hours have soared to $1.37 billion at the time of writing, per CoinGlass data.

Market sentiment has visibly soured, with the annualized futures premium on major exchanges dropping from roughly 7% to below 4% over the past week, according to Velo data, indicating investors are less willing to pay a premium for bullish bets.

Users reflected the bearish sentiment, as Greed dropped from 59% on November 1 to 51.9%, according to data from prediction market Myriad, launched by Decrypt’s parent company Dastan. Myriad users also flipped bearish on the price of Bitcoin, placing a 71% chance of Bitcoin’s next move taking it to $100,000 rather than $120,000—up from 44% on November 3.

The immediate catalyst is a crisis of confidence emanating from the decentralized finance sector, Derek Lim, Head of Research at market-making firm Caladan, told Decrypt. DeFi protocol Stream finance disclosed $93 million in fund asset losses Monday morning, he noted, while “total bad debt across lending markets is estimated at $284 million.”

Lim explained that the situation has triggered “contagion fears spreading through DeFi,” with multiple stablecoins and vaults facing exposure and forced redemptions.

The analyst pointed to a string of prior issues that eroded 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 said, adding that “any catalyst is going to amplify the risk-off” in a system that still contains very high amounts of leverage.

“The ongoing crypto market crash reflects a market-wide de-risking or risk-off sentiment as traders unwind leveraged positions amid macro uncertainty,” Ryan Lee, Chief Analyst at Bitget, told Decrypt.

Lim highlighted weak U.S. jobs data, a seemingly more hawkish Federal Reserve, and renewed uncertainty around the U.S. government shutdown, amplifying the aforementioned internal crypto issues. “Risk assets are getting dumped across traditional and crypto markets,” he said, with bond market volatility further unsettling investors.

Despite the short-term pain, Bitget’s Lee sees a potential silver lining, suggesting that “this kind of flush-out often resets valuations, paving the way for stronger, more sustainable accumulation once liquidity and sentiment stabilize.”

The confluence of these factors suggests more volatility is likely.

The path to stabilization, according to the analysts’ assessment, appears contingent on containing the DeFi contagion and achieving greater clarity on the macro front.