As November reaches its midpoint, the cryptocurrency market continues to experience a persistent downturn. Bitcoin (BTC) 
$78,084 has once again fallen below $100,000, failing to maintain its crucial 350DMA threshold of $102,800. This inability to hold the threshold puts a significant 1.5-year upward trend at risk. What are the reasons behind the decline in cryptocurrencies?
Why Are Cryptocurrencies Falling?
This month marks the third instance of Bitcoin prices dropping into five-digit territory, a development that was anticipated. The conclusion of the government shutdown was already priced in by Monday, offering no additional benefits upon its official end. Previous reports highlighted how ongoing debates in the artificial intelligence sector are troubling risk markets.
Technology stocks have enjoyed unparalleled gains driven by the enthusiasm surrounding GPT technologies. However, perpetual increases are unsustainable, and coupled with Federal Reserve members’ pessimism about a December rate cut, the current conditions made the decline unavoidable.
Bitcoin, having reached its historical peak at $126,080, hit the bull market high on the 1064th day post-halving. According to the rule that a cycle peak is determined within 500-550 days post-halving, the peak was reached. Many investors continue to believe that the historical patterns learned from the four-year cycles will apply in this cycle, thereby refraining from selling.
The fragility in tech stocks, increasing chances of skipping the December rate cut, expectations based on historical four-year cycle data, and the loss of the 350DMA are gradually normalizing five-digit prices from a technical standpoint.
What Awaits Cryptocurrencies?
Particularly, a decrease in institutional investor appetite and whale activities predominantly leaning towards sales, combined with ETF outflows, destabilize the foundations needed for sustainable growth. Momentum is crucial for growth, and all these factors not only weaken it but also create an environment where sales cannot be withstood.
In at least the coming months, it is likely we will see more negative movements for cryptocurrencies. Unless BTC recaptures the $102,800 and $107,000 thresholds, the October all-time high level above $126,000 will remain a distant target.
Some analysts are now arguing that $85,000 is a more reasonable target for BTC than $120,000. The nearly $20 billion in liquidations in October have continued with daily cleanouts reaching as high as a billion dollars. Today, we witnessed another half-billion dollar long liquidation. If the decline does not bring about higher lows and we start seeing new lows below $98,000, the proponents of the $85,000 target will unfortunately gain strength.
Quantitative tightening (QT) and expected supportive measures in the new year hold little significance for cryptocurrencies in the upcoming two months. If you add the approaching High Court tariff decision to the above-mentioned negative conditions, the motivations of sellers become clearer.
