Lead
Bitcoin fell below $85,000 for the first time since April, extending its decline to a 33% drawdown from its all-time high. On-chain data shows realized losses at levels last seen during the FTX collapse, while a prominent risk indicator is nearing a capitulation zone that has historically marked major market lows. Fund flows also turned sharply negative, underscoring fragile sentiment.
Key Developments
- Price drawdown: Bitcoin’s current pullback stands at -33% from its ATH. Historical episodes of >33% declines often preceded months of weakness, with a notable exception in June–July 2021 when a -53% drawdown ultimately resolved to new highs thereafter.
- Price milestone: BTC briefly dropped below $85,000, then attempted a rebound around the same level.
- Volatility risk: The market is flashing signs of structural weakness, raising the likelihood of sudden swings—both rallies and sell-offs—making leveraged trading particularly risky in the near term.
On-Chain and Flows
- Realized losses at FTX-era levels: Glassnode data indicates realized losses in Bitcoin have reached magnitudes last seen during the FTX collapse. The speed and scale of recent selling point to a contraction in "margin"-driven demand, as newer buyers capitulate and close positions. Losses are concentrated among short-term holders. Despite the drawdown, Glassnode pushed back on claims that a definitive market bottom has been set.
- Investment fund outflows: Crypto investment products saw $2 billion in net outflows over the past week, the largest weekly exodus since February 2025, signaling persistent risk aversion among institutional players.
Risk Indicators Near Capitulation
- Risk-off gauge: A widely watched indicator is within inches of its capitulation zone—the same area that coincided with Bitcoin’s major lows over the last two years. As of November 21, 2025, the risk level stands at 86.89, within historically high-risk territory.
- Seller exhaustion: Analysts suggest the market may be entering the final phase of seller exhaustion. Historically, such periods have featured sharp, rapid rebounds interspersed within broader downside phases before more durable trend reversals emerge.
Market Impact
- Trading composition: The share of altcoins in Binance’s overall trading volume rose to 60%, highlighting active rotation and heightened speculative interest outside of BTC.
- Loss realization: Investors collectively recorded their largest realized losses since the FTX implosion, reinforcing a climate of fear and forced de-risking.
Outlook
With Bitcoin’s drawdown at -33%, on-chain losses spiking, and risk gauges hovering near capitulation, market conditions point to elevated volatility ahead. Participants will likely watch for sustained stabilization above key price levels, continued improvements in fund flows, and confirmation of seller exhaustion before a more constructive trend can take hold.