Bitcoin News Today: Bitcoin's Plunge Deepens as Retail and Institutional Investors Flee

Bitcoin's price has retreated below $93,800, sparking renewed concerns about the resilience of its bull cycle. Analysts and market participants are closely watching key support levels, with Chinese analyst Banmuxia identifying $81,800 and $74,800 as critical thresholds that could signal a potential bottom in the ongoing bearish correction. These levels, derived from Coinbase price data, represent a price band where traders might expect a reversal in sentiment or a washout of stop-loss orders. However, the path to stabilization remains uncertain amid persistent institutional outflows and macroeconomic headwinds.

The recent decline has been exacerbated by a 27% drop from Bitcoin's October 6 all-time high of $126,199, coupled with a breakdown below the 50-week moving average-a technical signal often associated with cyclical exhaustion. QCP Capital analysts warned that the market is at a "critical juncture," with weakening liquidity and ETF outflows intensifying downward pressure. U.S.-listed spot Bitcoin ETFs recorded $1.11 billion in outflows over the past week, marking the third consecutive week of net redemptions. This trend reflects fading institutional confidence, as large investors retreat from the asset class.

JPMorgan's analysis further highlights the role of retail investors in the correction. The bank attributed November's crypto selloff to retail selling of Bitcoin and Ethereum ETFs, with $4 billion in outflows this month alone. Unlike October's correction, which was driven by crypto-native traders liquidating leveraged positions, November's decline stems from traditional retail investors using ETFs as their primary exposure. This distinction underscores a shift in market dynamics, with crypto ETFs increasingly treated as separate asset buckets from equities.

The impact of the downturn is particularly evident in companies with heavy Bitcoin exposure. Strategy, the world's largest publicly traded Bitcoin treasury firm, has seen its stock plummet nearly 60% over the past four months as Bitcoin prices collapse. The company's passive accumulation model-relying on equity and convertible debt offerings to fund Bitcoin purchases-has led to significant share dilution, with outstanding shares doubling from 160 million to 286 million in a year. As Bitcoin's price struggles to reclaim $100,000, Strategy's stock remains under pressure, trading at a price-to-earnings ratio of 8.67.

Amid the volatility, policymakers are exploring ways to integrate Bitcoin into mainstream finance. The Bitcoin Policy Institute endorsed the Bitcoin for America Act, which would allow taxpayers to pay federal taxes in Bitcoin and channel proceeds into a Strategic Bitcoin Reserve. The act, introduced by Rep. Warren Davidson, aims to modernize the U.S. financial system by leveraging Bitcoin's inflation-resistant properties. A proprietary BPI model estimates that if 10% of federal taxes were paid in Bitcoin since 2020, the reserve could accumulate a net advantage of $1.11 quadrillion by 2050.

Despite the bearish backdrop, some market participants remain cautiously optimistic. Louis LaValle of Frontier Investments argued that the current correction does not equate to a "crypto winter," noting that Bitcoin's decline lacks the catastrophic collapse seen in previous cycles according to analysis. However, the absence of a clear catalyst for a rebound-such as regulatory clarity or macroeconomic relief-leaves the path forward ambiguous. For now, the focus remains on whether Bitcoin can defend its critical support levels, with a break below $74,800 potentially signaling deeper trouble for the crypto market.