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Hongji Feng
Author
Hongji Feng
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The appetite for risk weakened at the beginning of November, and the change brought to crypto with speed. The market value of digital assets moved to about $3.45 trillion, the Index of fear and greed it fell to 20, and liquidations cleared more than $2 billion in one day.
Stressed positioning changes the mix of liquidity providers and slows the rate at which spreads tighten, so rebounds that start in thin books often depend on fresh money rather than mechanical squeezes, and the difference shows up in how quickly quotes fill across positions and time zones.
Macro Pressure and Cross-Asset Links
During the break, Bitcoin broke below $100,000 for the first time since June and finished well below the high of late October, while Ethereum fell below $3,100 and other large caps broke through wider intraday intervals, a sequence consistent with previous deleveraging phases in which the base compresses, funding resets toward neutral or negative, and forced exits drive prices through levels where rest offers are scattered.
Bitcoin Price (Source: CoinMarketCap)
Political communication from Federal Reserve officials are bracing themselves against a fast easing cycle while inflation is still high, which has raised expectations of rates relative to what many traders had penciled in after the autumn cut.
As the policy path tilts toward patience, long exposures lose some appeal, credit spreads stop narrowing, and sellers tighten inventory limits. Crypto tends to feel that environment because the financing conditions of the dollar and the volatility of equity shape how much balance is available to bear the risk.
When growth stocks and crypto move lower at the same time, hedges migrate into listed instruments first, and cash sales follow after liquidity fades. This sequence generally increases the likelihood of price breaks during transmissions between time zones.
How Structure Transforms Stress In Liquidations
Leverage was the accelerator: open interest dropped as long positions reached margin limits, and the first wave of forced selling pushed prices to levels where resting supply was scarce.
Once those thresholds have yielded, spreads widen, producers reduce the size at the top of the book, and the next wave of stops is triggered. The trial did not indicate a change in the utility of the protocol. He pointed out the management of positions under pressure.
Stablecoin flows followed the same pace. Creations slowed before the break, and redemptions increased in the move, which left fewer spot deals to absorb the forced sale. The base and funding drifted towards neutral and then negative in places, which told a simple story of leverage coming out of the system.
When these measures normalize alongside the volume of the growing place, the inversions tend to last longer; when the indicators diverge, the manifestations disappear in a day.
What will indicate the repair from here
Start with the dollar and taxesBecause a softer dollar and a calmer equity tape often precedes a better crypto depth. If front-end rate expectations ease and credit stabilizes, sellers usually rebuild inventories and quotas tighten more quickly after shocks. That backdrop reduces the likelihood of fresh price gaps during the stock windows.
So look at crypto cash indicators, such as a steady turnaround in stablecoin net issuance, suggesting new liquidation capacity for spot demand.
The loss patterns in the chain and the transfer behavior of larger and older portfolios also offer a cleaner read on stress. When their foreign exchange flows recede, forced sales usually fade and close to stabilize. If those cohorts continue to send to the exchanges, the pressure often persists even when the titles improve, and the combination with financing, depth and spot demand shows if the fear has really decreased.
