Crypto Market in "Extreme Fear" as Market Braces for Bitcoin to Drop Towards $80,000

The cryptocurrency market is crowded with investors who are too deep in losses to continue buying, yet unwilling to cut their losses.

Written by: Bao Yilong

Source: Wallstreetcn

Bitcoin is experiencing a free-fall decline, and traders are preparing for an even larger downturn.

On Monday, Bitcoin fell below $91,500, extending its recent plunge. Options market data shows that traders’ demand for protective positions at downside levels such as $90,000, $85,000, and $80,000 has surged sharply, with the volume of put contracts expiring at the end of November exceeding $740 million.

Chris Newhouse, Research Director at decentralized finance-focused Ergonia, stated:

As buyers who accumulated positions over the past six months find themselves deeply trapped, conviction-based long demand is becoming increasingly weak.

The sentiment index compiled by data analytics platform CoinMarketCap shows that cryptocurrency participants have fallen into an “extreme fear” state. The market is crowded with investors who are too deep in losses to continue buying, yet unwilling to cut their losses.

“Crypto Treasury Companies” Under Pressure

The pain is concentrated among the so-called digital asset “treasury companies.”

Earlier this year, these companies hoarded large amounts of cryptocurrency, attempting to become crypto hoarding concept stocks in the equity market.

Although Michael Saylor’s Strategy recently purchased another $835 million worth of Bitcoin, many of his peers are facing increasing pressure to sell assets to protect their balance sheets.

Greg Magadini, Director of Derivatives at Amberdata, said this selling is causing psychological pressure, noting:

Ethereum is particularly vulnerable to this trend, as the largest digital asset treasury companies are currently in a loss position.

Ethereum, the world’s second-largest cryptocurrency, has dropped to $2,975, down 24% since early October, showing particular weakness.

Macroeconomic Factors Pressure Risk Assets

Broader economic forces are also weighing on market sentiment. Expectations for Federal Reserve policy and discussions of an artificial intelligence bubble have become the two main headwinds facing cryptocurrencies and risk assets before the end of the year.

Adam McCarthy, an analyst at research firm Kaiko, stated:

I believe the Federal Reserve and AI bubble discussions are the two main headwinds facing cryptocurrencies and risk assets before year-end.

The cryptocurrency market has remained turbulent since the massive liquidation wave in early October, when about $19 billion in crypto assets were wiped out. According to Coinglass data, open interest in crypto futures contracts has declined, especially for smaller tokens like Solana, whose positions have dropped by more than half.

Thomas Perfumo, Global Economist at crypto exchange Kraken, stated:

This risk-off tone has spread to the cryptocurrency market, and sentiment remains fragile. This reflects broader macro anxiety rather than structural flaws.