On November 11, Bitcoin was trading around $73,653, after briefly hitting an intraday low of $72,695, its lowest level in three months. Ethereum fell to the $2,050–$2,066 range, bringing the $2,000 level into view.
This was not an isolated price pullback. Over the past week, leverage had already undergone a fairly thorough flush-out; but once it was over, prices found no support because no one stepped in to take over.
What did CPI break through?
October CPI rose 0.4% month over month, above expectations of 0.3%; core CPI rose 0.3% month over month, also above expectations. After the data was released, the 2-year U.S. Treasury yield surged 17 basis points to 4.73%, its biggest single-day gain in 19 months; the dollar index strengthened in tandem.
CME FedWatch shows the probability of a 25-basis-point rate hike in December is close to 89%, while the market is beginning to price in the tail risk of a 50-basis-point hike. Waller has publicly stated that if inflation momentum persists, the Fed is fully capable of raising rates by 50 basis points in December.
The rate hike itself is not news. The news is that a set of month-over-month data overturned the market’s previous pricing of “rate hikes nearing an end.” A 50-basis-point hike has gone from a fringe possibility to an option being discussed openly, reopening the upper end of the discount-rate range.
HTX Chief Analyst Cloud offers a contrasting view: the probability of a 50-basis-point hike remains low, and 25 basis points is the base case. The reasons include the Fed’s emphasis on consistent data, credit spreads having widened from 93 basis points to 348 basis points, and financial conditions having already tightened substantially. “Another 50-basis-point hike would actively create financial stability risks.” Whether this view holds depends on the next set of inflation data. But until the data provides an answer, the market can only price in a tighter path.
Leverage has indeed been thoroughly flushed out
Looking only at derivatives data, the current state is close to “clearing out.”
Open interest in perpetual futures fell nearly 20% in a week, funding rates turned negative, and the Fear and Greed Index dropped to 26, in the extreme fear zone. Cloud’s assessment: “Leveraged positions have been liquidated relatively thoroughly, limiting the scope for further short-term declines.”
Liquidation data for November 11 points in the same direction: approximately $718 million was liquidated across the market in 24 hours, including $246 million in BTC liquidations. Long positions accounted for 86.7%, or $177 million. What got wiped out were highly leveraged longs, not long-term holders with low leverage.
“Limited room for further short-term declines” and “a bottom has formed” are two different judgments. The former means selling pressure is starting to ease at the margin; the latter means buyers have stepped in. The current data only supports the first.
ETFs and stablecoins: contraction on both fronts
Prices did not rebound after leverage was flushed out, because spot-market liquidity was contracting at the same time.
U.S. spot Bitcoin ETFs saw net outflows of $1.282 billion last week (November 2–6), their largest weekly outflow since June; BlackRock’s IBIT alone saw $1.209 billion in outflows, accounting for the vast majority. On November 10, ETFs continued to see net outflows of $95 million, marking a fourth consecutive trading day of outflows. IBIT recorded $78.23 million in outflows that day.
The stablecoin market is contracting too. Total stablecoin market capitalization fell from $270.3 billion on October 1 to $263.4 billion in early November, a net outflow of $6.9 billion in one month. Stablecoins are the crypto market’s internal “cash layer”; their contraction means there is less dry powder available in the market, not more.
Leverage flushes create the conditions for “selling pressure to exhaust itself,” while outflows from ETFs and stablecoins create the reality of “buyers being absent.” When both are true at once, the market can stop falling, but it is hard for it to rise.
$73,000: where three lines converge
Technically, Bitcoin has fallen below its 50-week moving average (around $75,500), with five consecutive red weekly candles. The most critical level now is the $73,000–$73,500 range, where the 200-day moving average, recent lows, and corporate holders’ cost basis converge.
If this range is decisively broken, the next reference level will shift lower; if it holds, it offers at least a technical buffer. The RSI is nearing oversold territory, but being oversold is not in itself a reason to expect a reversal; it merely describes how large the decline has been.
Ethereum’s structure is weaker. After breaking below the key support at $2,157, ETH fell to $2,104 and is now hovering around $2,050. The psychological $2,000 level is the next one to watch.
What to watch next
Whether $73,000–$73,500 holds: this is the first line separating a “technical buffer after leverage has been flushed out” from a “trend breakdown.” If it holds, the thesis that selling pressure is exhausting itself has a foothold; if it fails, the next support zone will be repriced
Whether ETF outflows narrow: the $1.282 billion in weekly outflows and four consecutive days of outflows are the clearest evidence right now that buyers are absent. Only if outflows shrink substantially next week, or even turn positive for a day, can we say that “spot buying is coming back”
Will December bring 25 or 50 basis points? The disagreement between Cloud and the market centers on the probability of a 50-basis-point hike. If the next set of inflation data continues to come in above expectations, the market’s pricing of a 50-basis-point hike will rise further, reopening the upper end of the discount-rate range
Whether negative funding rates persist: negative rates mean shorts are beginning to collect funding, while longs are no longer crowded. This is one sign that the flush-out is complete, but it needs to coincide with narrowing ETF outflows to form a complete set of “bottoming conditions”
Leverage has been flushed out. This is the most certain conclusion the current data can support. But a market where leverage has been flushed out is not necessarily a market with buyers. The convergence of three lines at $73,000 is testing not how much leverage remains, but whether anyone in the spot market is willing to step in at this level.
Disclaimer: This content is for informational purposes only. Please do your own research.