The crypto market has been mired in a severe downtrend throughout November 2025, with Bitcoin stubbornly stuck below the psychologically important $100,000 level and failing to stage any meaningful bounce. Traders and analysts have floated a dizzying array of theories to explain the persistent weakness — ranging from structural liquidation events to exchange software bugs and looming classification risks for digital asset holding companies — many of which are not mutually exclusive.
The October 10 Liquidation Cascade: Market Makers Crippled
The most frequently cited catalyst is the October 10 liquidation cascade, the largest single-day levered position wipeout in crypto history. The trigger was an unexpected announcement of 100% tariffs on Chinese imports, which vaporized nearly $19 billion in leveraged positions within 24 hours. Market makers, already thinly capitalized after months of low volume, withdrew liquidity sharply. Tom Lee of Fundstrat noted that this event “truly crippled market makers,” leaving them with reduced capacity to stabilize order flow. A market without deep liquidity falls faster than expected, and the heavy long positioning only amplified the slide.
Exchange Glitches: Stablecoin Mispricing and Binance Zero-Balance Incident
Compounding the situation, Lee highlighted an exchange-side code issue that briefly mispriced a stablecoin at $0.65, triggering automated liquidations across multiple platforms. “It wasn’t a blockchain failure. It was a systemic failure,” Lee said, and it accelerated the decline.
Then came the Binance saga. A purported display error showed certain tokens as “0 USD” and temporarily separated assets like USDe, BNSOL, and wBETH, forcing Binance to pay $283 million in user compensation. While Binance insisted it was a front-end issue rather than an attack, others argued that a vulnerability window created by an upcoming oracle upgrade gave opportunistic actors a chance to exploit the valuation system. Since these tokens were heavily used as collateral, forced selling spilled into new liquidations.
DAT Reclassification Risk: Passive Funds May Be Forced to Sell
Another theory gaining traction: Digital Asset Treasury (DAT) overhang. Companies like Strategy (formerly MicroStrategy), Bitmain, and others have been major spot buyers during this cycle. But MSCI’s October announcement questioning whether to classify these firms as “companies” or “funds” rattled traders, according to Ran Neuner’s theory. A decision scheduled for January 15 could determine whether DATs remain eligible for inclusion in major indexes. If removed, pension funds and passive funds would be forced to automatically sell their holdings. Smart money saw that risk immediately and did not wait for the verdict, Neuner concluded.
Technical Anomalies: Historic Oversold Signals
Technical indicators point to something even stranger: Bitcoin’s chart shows some of the most extreme structural readings ever recorded. The X account Sightbringer notes a new all-time low for the daily MACD, an RSI near 21, and forced selling that appears mechanically timed — all while Bitcoin has only fallen about 33% from its all-time high. Such indicators usually appear after 50%–70% drawdowns, not moderate pullbacks. This divergence has fueled a growing belief that someone — or a few entities — is de-risking on a thin market with impaired execution. The pattern matches: identical selling windows, thin liquidity gaps, and lack of normal bounce behavior.
Macro Headwinds: AI Bubble Fears, Japan Bonds, Trade War
Beyond crypto-specific factors, broader macroeconomic pressures have accumulated: concerns over the bursting of the AI bubble, an explosion in Japanese long-term government bond yields, Trump’s escalating trade war, and expectations of a coming U.S. recession. These external shocks layered on top of the market’s structural fragility, creating a confluence of negative forces.
Silver Linings: Fresh Capital Inflows and Long-Term Holder Accumulation
Yet not all is doom. USDC inflows have jumped, suggesting new capital is preparing to buy. Long-term holders have absorbed tens of thousands of Bitcoins over six weeks. The Solana exchange-traded fund (ETF) continues to see daily inflows, and institutional adoption quietly persists in the background. Historically, brutal mid-cycle pullbacks are normal — the 55% decline in 2021 still ended with a record high of $69,000.
Simply put: multiple negative forces collapsed at once. But long-term structural demand has not vanished, and the forced-selling narrative implies one thing — when the deleveraging ends, the recovery could be violent.