Bitcoin Plunges Below $85K: Market Braces for Potential ’Chaos’ as Critics Sound Alarm

Digital gold loses its luster as Bitcoin crashes through critical $85,000 support level.

The Fear Spreads

Traders scramble for exits while institutional players watch from the sidelines—another day in crypto paradise where 'stable' is just a four-letter word.

Market Psychology Shifts

Fear replaces greed as leveraged positions get liquidated en masse. The so-called 'smart money' that promised endless gains suddenly remembers that charts can go down too.

Regulatory Shadows Loom

While critics predict chaos, the real question remains: when will the next 'this time it's different' narrative emerge to lure fresh capital into the meat grinder?

Another brutal reminder that in crypto, the only certainty is volatility—and the occasional Wall Street veteran saying 'I told you so' while sipping their morning coffee.

Market Suffers Deepening Sell-Off as Bitcoin Breaks Key Support

Analysts trace the latest decline to a cascading unwind that began in October, when over $19 billion in Leveraged positions were wiped out in a single liquidation wave. Liquidity has struggled to recover ever since.

According to CoinShares’ James Butterfill, large holders have unloaded more than $20 billion in bitcoin since September, turning what began as a normal correction into a structurally fragile market environment.

Volatility has been made worse by wider macro pressure, the Fed’s uncertain policy path, doubts about December rate cuts, and fading appetite for speculative assets. Wall Street’s swingy reaction to Nvidia’s earnings added another LAYER of instability, further weakening crypto’s ability to attract fresh bids.

ETF Outflows Hit Record Levels, Raising Liquidity Concerns

The pain is intensifying in the ETF arena. Spot Bitcoin ETFs in the U.S. recorded their largest single-day outflow ever, about $523 million, as institutional investors pulled back amid growing volatility and macro uncertainty.

November’s cumulative outflows are now nearing $3 billion, a stark reversal from the inflow-driven rally that pushed Bitcoin to near-record highs earlier this year.

JPMorgan analysts say retail traders, not institutions, are driving this exit. Nearly $4 billion has been withdrawn from Bitcoin and Ether ETFs in November alone, marking an unprecedented shift in behavior from smaller investors typically viewed as long-term holders.

The ETF retreat has wide implications like thinner liquidity, wider spreads, and heightened volatility. While advocates argue regulated funds remain a critical entry point for institutions, the current stress test highlights how quickly sentiment can flip in a leveraged ecosystem.

Market commentator Jacob King warned that Bitcoin is entering “months of chaos,” pointing to what he says is the most unprofitable mining environment in a decade. Others argue that a liquidity crisis is spreading beyond crypto into correlated assets, echoing long-time critic Peter Schiff’s stance.

Some analysts even suggest Bitcoin may be slipping into a full bear market, noting its 32% decline from its recent all-time high. Options traders are now heavily hedging around $85,000 and $82,000, bracing for more downside.

Related Reading: ethereum Co-Founder Highlights Threats From BlackRock’s Institutional Influence

Former U.K. Chancellor Kwasi Kwarteng shrugged off the panic, calling the pullback a “chance to stack more Bitcoin for less.” Long-term believers like investor Mike Alfred maintain that volatility is part of BTC’s natural cycle, projecting a future rebound toward $150,000–$200,000 once market conditions stabilize.

Cover image from ChatGPT, BTCUSD chart from Tradingview