Black Swan Attack! Bitcoin Plummets $5500, 340,000 People Lose Everything

In the past 24 hours, the crypto assets market has been hit by a black swan event, with Bitcoin plummeting from the $110,000 position to below $104,500, a drop of nearly 4%. Coinglass data shows that over the past 24 hours, the total liquidation in the crypto assets market exceeded $1.2 billion, with more than 340,000 people liquidated, over 90% of which were long orders.

Bitcoin Plummet 5500 USD Triggers Chain Liquidation

(Source: CoinMarketCap)

From the evening of November 3 to noon on November 4, Crypto Assets collectively “plummeted”. Among them, Bitcoin dropped over 4000 USD during the session, quickly falling from the psychological barrier of 110,000 USD to below 106,000 USD, with a decline nearing 4% at one point. Such a decline is extremely rare at Bitcoin's current price level, with a drop of 4000 USD equivalent to the annual defense budget of a medium-sized country evaporating in a matter of hours. SOL, BNB, ADA, DOGE and others all followed suit, with smaller market cap coins experiencing even more severe declines.

Bitcoin fell to $104,500, Ethereum dropped over 7% to $3,595, XRP fell 7.5%, BNB, ADA, and DOGE dropped over 8%, and SOL fell over 11%. This overall decline pattern indicates that this is not a specific negative sentiment targeting any particular coin, but rather a systemic risk aversion sentiment dominating the market. When Bitcoin, as a barometer of the crypto market, starts to plummet, funds will accelerate outflow from high-risk small-cap coins, resulting in altcoins typically experiencing declines that are 2-3 times that of Bitcoin.

Coinglass data shows that in the past 24 hours, the entire crypto assets market has experienced liquidations totaling 1.278 billion USD, with over 340,000 individuals being liquidated. Among them, long orders accounted for 1.162 billion USD in liquidations, while short orders accounted for 116 million USD. This data reveals the fragility of the market structure. Over 90% of the liquidations are long orders, indicating a severe bullish bias in the market before the plummet, with a large number of investors using leverage to bet on price increases. When prices suddenly reverse, these leveraged longs become the fuel for a chain of liquidations, with the selling pressure generated by each batch of liquidations further lowering prices and triggering the next batch of liquidations.

Core Data of Black Swan Events

BTC Fall: From 110,000 plummet to 106,000 USD (-4,000 USD, approximately -3.6%)

ETH Maximum Fall: Once exceeded 9%, fell below the 3600 USD support.

Total Liquidation Amount: 1.278 billion USD (24 hours)

Get Liquidated Count: 340,000 people

Long-Short Ratio: Long order 1.162 billion USD (91%) vs Short order 116 million USD (9%)

Maximum Single Liquidation: HTX-BTC-USDT 3395.87 million USD

The largest single liquidation occurred in HTX-BTC-USDT, valued at 33.9587 million USD. Such multi-million dollar level liquidations typically come from institutions or professional trading teams, indicating that even experienced large players were not spared in this black swan event.

Balancer Hack Attack Overlaid with Fed's Hawkish Shift

Analysts point out that the Ethereum ecosystem's decentralized finance (DeFi) protocol Balancer has been exposed to a hacking attack, with losses possibly exceeding 100 million dollars, an incident that has intensified panic in the crypto assets market. Before the plummet of Ethereum, the decentralized finance protocol Balancer, which is based on Ethereum, suffered a loss possibly exceeding 100 million dollars in a hacking attack. This vulnerability is the latest in a series of bearish events over the past few weeks that have left cryptocurrency investors on edge.

The timing of the Balancer incident is extremely unfavorable. In an already fragile market, a major DeFi protocol suffering a significant hacking incident immediately raised questions about the security of the entire DeFi ecosystem. Investors began to worry whether other protocols also had similar vulnerabilities, and this panic prompted them to withdraw funds from DeFi applications, turning to safer assets or simply exiting the market. As the main platform for DeFi, Ethereum's price is highly sensitive to DeFi security incidents, and the hacking of Balancer directly caused a 9% Plummet in ETH.

In addition, several Federal Reserve officials recently made hawkish remarks, suggesting that a rate cut in December “is not a foregone conclusion,” which clearly shifted investor sentiment towards defense. CoinShares Research Director James Butterfill pointed out in a report that the hawkish stance, coupled with the absence of key economic data releases, has left investors in a wait-and-see mode, as Fed Chairman Powell hinted that a rate cut in December “is not a foregone conclusion.”

The shift in the Federal Reserve's policy stance has far-reaching implications for the crypto market. In recent months, the market has been anticipating that the Federal Reserve would continue to cut interest rates to support the economy, and this easing expectation has been a crucial factor supporting risk assets, including Crypto Assets. Now, Powell has hinted at a possible pause in rate cuts or even a reconsideration of rate hikes, fundamentally changing market expectations. A high-interest-rate environment is extremely unfavorable for Crypto Assets, as it increases the opportunity cost of holding non-yielding assets like Bitcoin, making investors more inclined to choose traditional assets with fixed returns.

At the same time, some stocks related to Crypto Assets are also under pressure, with Circle closing down over 7% on Monday, Coinbase falling nearly 4%, and MicroStrategy down 1.8%. The decline of these Crypto Assets-related stocks reflects the pessimistic outlook of traditional capital markets on the prospects of Crypto Assets. When institutional investors start to sell off Strategy stocks, it usually indicates that they believe the Crypto market will enter a longer adjustment period.

Institutional demand slows: BlackRock ETF outflows $946 million this week

Despite the ongoing rise of the US stock market driven by the AI boom, the recent reports from the US cryptocurrency news about the “significant decline in Bitcoin ETF inflows” have attracted the attention of the entire Crypto Assets market. A recent report from digital asset management company CoinShares shows that US Bitcoin exchange-traded funds (ETFs) were hit hard by institutional outflows last week, with redemptions reaching $946 million.

Among them, the iShares Bitcoin Trust (IBIT) saw a weekly outflow of about 400 million USD, making it the largest outflow among the 11 spot Bitcoin funds currently trading. However, the total net outflow of all digital asset tracking funds is relatively moderate, at 360 million USD. This data difference indicates that although Bitcoin ETFs are facing outflow pressure, some funds have shifted to other digital asset products rather than completely exiting the market.

The new data from the blockchain data analysis platform Glassnode shows that institutional demand for Bitcoin has significantly slowed down, which stands in stark contrast to the increasingly optimistic sentiment in the traditional market led by the technology and infrastructure sectors. Glassnode data indicates that over the past three weeks, BlackRock's spot Bitcoin ETF has seen weekly net inflows of less than 600 Bitcoins. In previous major uptrends of this cycle, the ETF's weekly net inflows could exceed 10,000 Bitcoins, and the current inflow has dropped significantly compared to that time. Analysts at Glassnode indicate that this marks a clear slowdown in institutional demand.

Charles Edwards, founder of Capriole Investments, stated that the demand for Bitcoin from agents has fallen below the new coin mining rate for the first time in 7 months. Although this indicates that large buyers may be retreating, other activities suggest that the entire crypto market is exhibiting a risk-averse attitude. This observation corroborates the earlier analysis of MicroStrategy's slowing buy orders, indicating that both corporate buyers and ETF institutional buyers are slowing down simultaneously.

The recent slowdown in demand is one of the weakest periods for institutional accumulation since the launch of the ETF. Data indicates that after several months of large-scale accumulation, large investors may be entering a consolidation phase. Bitcoin prices have recently struggled to maintain upward momentum and have now fallen below $110,000. The flow of funds into the ETF is also seen as an important leading indicator reflecting the sentiment of institutional investors.

Despite the weak performance of capital inflow data, on-chain analysts have identified some potential dynamics. The cryptocurrency data platform Whale Insider reported that BlackRock has transferred 1,198 Bitcoins (worth approximately $129 million) to the cryptocurrency exchange Coinbase, an operation that may indicate that the institution is adjusting its portfolio or making custody adjustments. Such transfer operations do not necessarily represent a selling behavior, but highlight that large asset management institutions are actively managing their cryptocurrency holdings.

EU regulatory expansion adds systemic uncertainty

Another piece of news has also drawn attention. Local time on Monday, foreign media reported that the EU plans to expand the regulatory scope over stock exchanges and Crypto Assets exchanges by granting the European Securities and Markets Authority (ESMA) broader regulatory powers. This move aims to bring key financial market infrastructures operating cross-border within the EU under centralized regulation, covering stock exchanges, Crypto Assets service providers, and post-trade operators.

This measure is part of the EU's “Capital Markets Union” initiative, which aims to reduce the fragmentation of regulations and lower the costs of cross-border transactions. Under the proposed regulatory framework, ESMA will gain direct regulatory powers similar to those of the U.S. Securities and Exchange Commission. The relevant draft is expected to be released in December, containing provisions that grant ESMA binding powers, allowing it to make final decisions on disputes.

The timing of this regulatory change is extremely sensitive. At a time when the market is already fragile due to hacker attacks and the Federal Reserve's hawkish shift, expectations of tighter regulations further undermine investor confidence. Although in the long run, a clear and unified regulatory framework may benefit the development of the industry, in the short term, the market typically interprets tighter regulations as negative. Luxembourg's Finance Minister, Gilles Roth, stated: “We aim for regulatory convergence, rather than establishing a costly and inefficient centralized model.” However, it remains uncertain whether the opposition from small countries can stop this proposal.

This black swan event is a perfect storm of multiple bearish factors: the technical Balancer hack, the macro Federal Reserve's hawkish turn, the outflow of ETF funds and a slowdown in institutional buying, and the regulatory tightening expectations from the EU. These factors erupted within 24 hours, creating overwhelming selling pressure, resulting in 340,000 people getting liquidated and 1.2 billion dollars evaporating.