Bitcoin Drops 5% Below $90,000 as Bearish Factors Accumulate

Bitcoin slipped under the $90,000 mark on Monday, as a wave of selling intensified following the cryptocurrency's sharpest monthly decline since mid-2021. Heightened risk aversion among investors pushed both traditional stocks and digital assets out of favour, fueling the retreat in the world’s leading cryptocurrency.

At one stage, bitcoin plunged as much as 6.1%. By 1120 GMT, the cryptocurrency was trading around $86,461, down 5.2% for the day. This marked its largest single-day drop in a month and kept it dangerously close to last month’s eight-month low of $80,553.

November Losses Reach Record Levels

Over the course of November, bitcoin lost more than $18,000 in value, with unprecedented outflows from the market. This translated into the largest dollar decline for the asset since May 2021, when a series of cryptocurrencies experienced steep collapses.

Understanding Seasonal Trends

With its relatively short history, Bitcoin does not have a long-established seasonal pattern to guide traders’ expectations for December. Historically, however, the digital asset has shown a tendency to gain around 9.7% during this month, ranking it third among its best-performing months. October has generally been the strongest, with an average rise of 16.6%, while September has been the weakest, averaging a loss of 3.5%.

Correlation with Traditional Markets

Analysts noted that bitcoin’s current performance may be more closely tied to stock market behavior than seasonal trends. The cryptocurrency’s price movements have increasingly mirrored those of equities, reflecting broader investor sentiment and risk appetite.

Bearish Signals from Futures

Further evidence of caution comes from CME bitcoin futures, which indicate growing bearishness. Contracts set to expire in three months are trading at their narrowest premium over near-term contracts in at least a year. This suggests that investors are increasingly hesitant to wager on a sustained price increase over the coming months.

Ether, the second-largest cryptocurrency, mirrored bitcoin’s decline, dropping nearly 6% to $2,845. The token has lost around 22% in value during November, its largest monthly drop since February, when it fell 32%.

Impact on Strategy Shares

The recent downturn has amplified pressure on companies with significant cryptocurrency exposure. Strategy shares, for instance, have fallen 60% over the past year, compared with a 13% drop in bitcoin itself. This slump raises the risk of exclusion from benchmark indices, which could further weigh on both the company’s stock and its mNAV metric. MSCI, an index provider, is currently consulting on whether to remove companies whose digital asset holdings exceed 50% of total assets.

Since peaking at roughly $4.3 trillion in total market value, the global cryptocurrency market has shed more than $1 trillion, underscoring the scale of losses faced by digital asset investors over recent months.