Bitcoin’s recent price decline is significantly influenced by derivative liquidations, which have created a cascade effect in the market. In early November 2025, Bitcoin briefly dropped to around $93,000, wiping out all its gains for the year and triggering over $510 million in liquidations across crypto derivatives markets within 24 hours[1]. These liquidations mainly involved long positions, where traders who had borrowed money to bet on rising prices were forced to sell as prices fell, accelerating the downward pressure[1][2].
Derivative liquidations occur when leveraged traders cannot meet margin requirements due to falling prices, causing exchanges to automatically close their positions to prevent further losses. This forced selling floods the market with supply, pushing prices down further and triggering more liquidations in a feedback loop. For example, during a sharp 40-minute cascade in October 2025, $6.93 billion in leveraged positions were liquidated, with $3.21 billion wiped out in just 60 seconds, mostly from long positions[3]. This intense selling pressure was exacerbated by thin order books and widened spreads, amplifying price drops beyond what normal trading might cause[3].
The impact of these liquidations is not isolated to Bitcoin alone but extends to other cryptocurrencies like Ethereum, Solana, XRP, and Dogecoin, which also experienced multi-million-dollar liquidations as their prices followed Bitcoin lower[1]. The derivatives market’s structure, with a high ratio of long to short positions, means that when prices start to fall, the liquidation of longs dominates, creating a one-directional downward pressure[3].
Beyond the mechanics of liquidations, other factors contribute to Bitcoin’s fall. The fading optimism around regulatory clarity and policy support in the United States has led to profit-taking after Bitcoin reached all-time highs earlier in the year[4]. Many traders had used leverage to chase these highs, which works well in rising markets but leads to sharp corrections when prices reverse[4]. Additionally, institutional investors have been withdrawing funds from Bitcoin spot ETFs, with outflows exceeding $2.3 billion in recent weeks, signaling waning confidence among large investors and adding to selling pressure[2].
Technical indicators also point to bearish trends. Bitcoin recently closed below its 50-day exponential moving average for the first time since August 2025, and key support levels around $93,770 to $94,000 are under threat. If these levels break, Bitcoin could slide further toward $90,000 or lower[2]. The Fear and Greed Index has dropped to extreme fear levels, reflecting widespread trader anxiety and uncertainty about the market’s direction[1].
On-chain dynamics also play a role. After the 2024 Bitcoin halving, miners receive fewer coins per block, and when prices dip, some miners sell more coins to cover operational costs, adding steady selling pressure[4]. Moreover, coins moving from long-term holders to newer buyers near price highs tend to increase volatility, as new buyers are more likely to sell quickly during downturns[4].
Despite these challenges, some analysts suggest that Bitcoin may be approaching a local bottom. Historical patterns show that sustainable bottoms often form after short-term holders capitulate and realize losses, which appears to be happening now[5]. The pace of realized losses is stabilizing, indicating that the intense selling pressure from liquidations might be nearing exhaustion[5].
In summary, Bitcoin’s recent fall is largely driven by forced liquidations in the derivatives market, which create a self-reinforcing cycle of selling that pushes prices down sharply. This is compounded by fading regulatory optimism, institutional outflows, technical bearish signals, and on-chain selling dynamics. While these factors have created significant downward pressure, signs of capitulation and stabilization suggest that the market may be nearing a point where selling pressure could ease, potentially setting the stage for a rebound.