If I were to map the flow of funds behind this crypto market downturn, I think the most important thing to watch isn’t any single piece of negative news, but rather three previously distinct funding channels that are all tightening at the same time.
One comes from institutions, another from the tech capital markets, and the third from macro monetary policy.
First, let’s look at institutional funds.
U.S. spot Bitcoin ETFs have recently seen persistent net outflows. According to data released on November 12, there were net outflows for five consecutive trading days, totaling approximately $1.44 billion.
This means some investors who gained BTC exposure through traditional financial channels are reducing their positions.
ETFs do not represent the views of all institutional investors, but they are an important window into traditional financial institutions’ participation in the crypto market.
When ETFs see persistent redemptions, the market needs more new spot buyers to absorb the supply.
If new demand is insufficient, prices naturally become more vulnerable to selling pressure.
The second shift is in the AI capital markets.
Nvidia founder Jensen Huang has officially stepped down as CEO and director. CFO Colette Kress is serving as interim CEO while the company searches for a permanent successor.
The impact of this development on the AI industry goes far beyond a leadership change at a single company.
Nvidia has long been a key symbol of investment confidence in the AI industry. Its GPUs, data centers, and software ecosystem influence capital investment expectations across the entire AI supply chain.
When a core company like this undergoes a sudden leadership change, investors naturally reassess the continuity of its operations, its supply chain arrangements, and the pace of future investment.
More importantly, US tech stocks and crypto assets share some exposure to the same risk capital.
When investors begin to reduce their exposure to high-growth tech assets, the crypto market may also be affected by shifts in sentiment and capital allocation.
Of course, Nvidia’s personnel changes do not mean that BTC’s fundamentals have changed directly. What truly matters is whether risk appetite is contracting in both markets at the same time.
The third shift comes from the Fed.
US inflation data has remained above expectations, renewing concerns about a rate hike in December.
As of November 12, interest-rate futures pricing indicated an implied probability of about 89.9% that the policy rate would fall within the 4.00% to 4.25% range in December, corresponding to a 25-basis-point increase from the current range.
This is only what market pricing implies; it is not a decision the Fed has made.
But it has already affected investors’ expectations for future funding costs.
Rising rate expectations mean that holding highly volatile assets comes with a higher opportunity cost.
Assets that depend on market liquidity and investors’ risk appetite are especially vulnerable.
Put these three factors together, and it becomes clear why this downturn has been so pronounced.
Institutional ETF inflows are declining, uncertainty is emerging in the tech capital markets, and macro funding costs are under pressure to rise.
With pressure tightening on all three fronts at once, it naturally becomes harder for the market to find momentum for a sustained rally.
What truly accelerated the decline further, however, was a chain reaction in the derivatives market.
According to CoinGlass data, during a 24-hour period ending November 13, liquidations across the market totaled approximately $1.47 billion. Long positions accounted for about $1.31 billion, or nearly 89%, affecting more than 175,000 traders.
The largest single liquidation was a BTC long position on Hyperliquid, worth approximately $31.09 million.
There is an important distinction here.
Liquidations are not necessarily what initially causes a market to fall. But when large numbers of long positions are forced to exit, they add further selling pressure to the market.
In other words, ETF outflows, declining risk appetite for tech stocks, and expectations of rate hikes are sources of initial pressure, while leveraged liquidations further amplify price volatility.
I believe that instead of focusing only on whether BTC can reclaim $70,000, we should be watching three more useful indicators.
First, whether spot ETFs begin to see sustained net inflows again. If institutional capital returns to the market, it could indicate that demand for exposure through traditional financial channels is recovering.
Second, whether Nvidia’s leadership transition proceeds smoothly, and whether earnings reports and capital spending among companies in the AI supply chain show any significant changes.
Third, whether expectations for the Fed’s December policy shift. If inflation gradually cools and expectations for funding costs stabilize, pressure on market liquidity may gradually ease.
For those who regularly use both digital assets and traditional financial markets, this market downturn offers another practical lesson: don’t expose all your funds to the same kind of market risk.
For example, long-term investment funds, short-term trading funds, and funds for everyday cross-border payments all serve different purposes.
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I believe that the more unstable the market is, the more important it is to distinguish between the different purposes of your funds.
Not every unit of U has to be used for trading, and not every market decline calls for an immediate decision to buy or sell.
Finally, what I want to say is that the real concern in this market downturn is not any single piece of negative news, but the simultaneous pressure on several important channels through which capital flows.
ETFs shape how some institutional capital is allocated, the tech industry affects risk appetite, Fed policy influences funding costs across the market, and derivatives leverage can amplify short-term volatility.
Only when these factors begin to improve again is the market more likely to stage a stable recovery.
Until then, rather than rushing to guess where the bottom is, it’s better to first understand where the money is coming from and where it’s going.
This article is for sharing purposes only. Please conduct your own analysis and make your own judgments. It does not constitute investment advice. Avoid unnecessary losses!