Bitcoin News Today: DeFi Exploit Exposes Crypto Market's Fragile Foundation

The cryptocurrency market is reeling from a confluence of technical breakdowns, regulatory uncertainty, and a high-profile decentralized finance (DeFi) exploit that has deepened investor pessimism. Bitcoin fell 17% to $104,130 on November 4, 2025, triggering over $1.3 billion in liquidations and pushing major altcoins like Aster, Aptos, and Toncoin into bear market territory, according to CoinCentral. The selloff coincided with a $128 million exploit of Balancer's Composable Stable Pools, exposing vulnerabilities in DeFi's infrastructure and amplifying fears of a broader systemic collapse, as reported by Yahoo Finance. Analysts, including renowned crypto strategist Tom Lee, warn that it could take weeks for the market to stabilize and rebuild confidence, according to Yahoo Finance.

Bitcoin's collapse was fueled by bearish technical patterns, including a head-and-shoulders formation and a death cross on its charts, signaling prolonged downward pressure, CoinCentral reported. The cryptocurrency also broke below key support levels, including its Ichimoku cloud and ascending channel, with $100,000 now a critical psychological threshold, according to CryptoRank. Meanwhile, the U.S. dollar index surged to 99.80, its highest level since August 1, exacerbating crypto's inverse relationship with fiat stability, CoinCentral noted.

Federal Reserve policy further complicated the outlook. While the central bank cut rates by 0.25% last week and plans to end quantitative tightening in December, officials like Austan Goolsbee hinted at skipping additional cuts due to persistent inflation concerns, CoinCentral observed. This uncertainty has left crypto investors in limbo, as the asset class typically thrives during periods of monetary easing.

Panic selling intensified as the Crypto Fear and Greed Index plunged to 30, entering the "fear" zone, CoinCentral reported. Daily liquidations spiked 160% in 24 hours, wiping out 327,790 traders — a fraction of the 1.6 million liquidated during the October 11 crash, CoinCentral added. The trauma of that event, coupled with renewed volatility, has created a self-fulfilling prophecy: traders hesitate to buy the dip, fearing further declines.

The market's fragility was compounded by a critical rounding error in Balancer's smart contracts, which allowed attackers to drain $128 million across multiple chains, as initially reported by Yahoo Finance. The exploit, confined to Balancer V2 Composable Stable Pools, exposed flaws in automated market maker (AMM) mechanics and raised questions about the security of multi-chain liquidity protocols; Balancer's response was detailed by Crypto.News. Recovery efforts, including emergency hard forks and whitehat interventions, have reclaimed roughly $19 million in stolen assets, but the incident has shaken trust in DeFi's resilience, according to TradingView.

Other DeFi platforms also faced setbacks. Stream Finance lost $93 million after its xUSD stablecoin depegged to $0.30, while Elixir's deUSD collapsed to $0.05 amid $400 million in outflows, as reported by Yahoo Finance. These events echo the 2021 Terra Luna collapse, reigniting debates about the risks of algorithmic stablecoins and leveraged positions, a point raised in the earlier Yahoo Finance coverage.

Despite the carnage, some analysts remain cautiously optimistic. Historically, crypto markets have rebounded from sharp selloffs, though predicting timing remains speculative, according to Coinfomania. Tom Lee and others emphasize that it could take weeks for traders to digest the 10/11 crash and the DeFi exploit, as liquidity providers and institutional investors reassess risk exposure, as noted above.

For now, Bitcoin hovers near $103,000, with altcoins lagging as risk-off sentiment persists, according to FXStreet. The road to recovery will depend on whether the Fed pivots to aggressive rate cuts, DeFi protocols implement robust security upgrades, and retail investors regain confidence in the market's fundamentals. Until then, the crypto winter shows no signs of abating.

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