The cryptocurrency market extended its recent downturn on Thursday, with Bitcoin sliding more than 4% and breaking below $87,000 for the first time since April.
The decline came alongside a reversal in U.S. equities, which surrendered early gains despite another burst of enthusiasm around artificial intelligence stocks.
Bitcoin’s retreat follows several weeks of steady unwinding by leveraged traders after October’s historic surge, a shift that has drained liquidity and left the market highly sensitive to even modest selling. Large holders have been reducing exposure since late September, deepening the pressure on an already fragile order-book environment.
James Butterfill, head of research at CoinShares, said heavy sales from long-term whales remain a defining force in the current cycle.
“Crypto is suffering from heavy selling by whales who follow the four-year cycle narrative,” he said, noting that more than $20 billion has been sold by these investors in recent months. “While we don’t subscribe to this view from a fundamentals perspective, it has become somewhat self-fulfilling.”
The broader backdrop has not helped. U.S. markets swung lower as concerns over AI-stock valuations and uncertainty around potential December rate cuts unsettled risk appetite.
According to analysts, digital assets have become detached from equity market momentum, dealing instead with the aftershocks of October’s violent liquidation wave.
That single-session futures wipeout, the largest on record, erased more than $19 billion in leveraged positions and left liquidity across major crypto venues depleted.
Speaking with Benzinga, Nicolai Søndergaard, research analyst at Nansen, said the effects of that event are still visible. “Market depth has fallen by roughly 30% since then, which means even modest selling pressure can move prices sharply,” he explained.
“That’s essentially why Bitcoin slipped below $90K today. When liquidity is this thin, it takes far less capital to push the market in either direction, and when you layer leverage on top, volatility becomes inevitable,” he added.
He further said that options markets indicate a non-negligible probability of a move toward the mid-$80,000s, though a stabilization at current levels or a rebound remains more likely.
Others argue the decline should not be mistaken for fading confidence.
In a statement to Yellow.com,Keith Grose, CEO of Coinbase UK, said macro forces, not structural weakness — are driving sentiment. “The current market is shaped by jitters around AI-bubble fears and a broader risk-off mood among investors, rather than a loss of faith in digital assets,” he said.
“The past year has brought real progress: clearer regulatory frameworks, stronger infrastructure, growing institutional participation and major advances in onchain utility. This period is a recalibration, not a reversal,” he added.
Some analysts believe Bitcoin’s behavior this cycle signals something more consequential.
Robert Le, head of research at Kiln, said the timing of Bitcoin’s most recent peak, which arrived nearly 100 days earlier than in previous post-halving periods, suggests long-standing patterns may be breaking down.
“I believe that ETFs, sovereign accumulation, and balance-sheet buyers could turn what used to be a reflexive retail boom-bust pattern into something closer to a liquidity-driven macro asset,” he said.
With the Federal Reserve’s quantitative tightening program set to end on December 1, he argued that the highs between August and October “may prove to be just a midpoint.”
If the four-year cadence is dissolving, he said, the market may be underestimating both upside potential and downside risk. “This may be the first cycle where the peak doesn’t look like a peak.”
As liquidity remains thin and positioning resets across the market, traders expect continued volatility.
