Bitcoin’s Plunge Below $100K – Understanding the Crash and Its Ripple Effects
- Editor
- Nov 14, 2025
- 15 min read
Bitcoin’s price has seen a dramatic crash over the past few days, shattering the psychologically important $100,000 level. After peaking around $126,000 in October, Bitcoin tumbled in stages – from $120K to $115K, then to $106K, and ultimately below $100K – for the first time in months[1]. This steep drop has rattled the crypto market, sparking extreme fear among investors and raising questions about what caused the downturn. In this deep dive, we’ll explore the market psychology behind the sell-off, how retail and institutional players are reacting, and the role of recent regulatory and political events – including U.S. government drama and remarks by President Trump – in shaping Bitcoin’s trajectory.
Recent Price Crash: What Happened?
Bitcoin’s fall below six figures marks a stunning about-face after a prolonged rally. On November 4, 2025, Bitcoin broke below $100,000 – a level it had held for roughly 180 days – completing a 20% slide from its all-time high (~$126,210) reached just weeks earlier[2]. The breach of the $100K psychological support triggered broad market panic, with a wave of sell-offs intensifying across the crypto market[3]. Within 24 hours, Bitcoin plunged over 4% to the mid-$97K range, and major altcoins like Ethereum, XRP, Solana, and others fell 8–10% in sympathy[4].
Several converging factors created a “perfect storm” behind this crash:
Macro & Tech Sector Weakness: Fears of an “AI bubble” bursting and a sharp selloff in tech stocks spilled over into crypto. Over $500 billion was wiped from semiconductor stocks during this period, underscoring Bitcoin’s tie to speculative tech assets[5]. Economic headwinds also emerged from abroad – for instance, weaker-than-expected data from China cooled risk appetite in Asia, dragging Bitcoin down in tandem with equities[6][7].
Federal Reserve Hawkishness: Shifting expectations around U.S. monetary policy added pressure. Hopes for near-term Fed rate cuts faded, removing a tailwind that had helped propel Bitcoin earlier[8]. The uncertainty over Fed policy, exacerbated by delayed economic reports during the U.S. government shutdown, left traders on edge[9].
Leverage and Liquidity Crunch: The speed of Bitcoin’s decline was amplified by overleveraged positions unwinding. As prices fell, liquidity pockets evaporated and a cascade of liquidations ensued[10]. Within one 24-hour span, more than $1 billion in leveraged crypto bets were wiped out (roughly $887M of it in long positions)[11]. Thin order books meant that once BTC sliced through $100K, stop-loss orders and margin calls accelerated the drop in a vicious feedback loop[12][13]. Over 235,000 traders saw positions liquidated, including one single $44 million long position – highlighting how aggressively bullish bets got flushed out[11][14].
Institutional Flows Reversing: After a period of euphoria in October – when Bitcoin ETFs saw record inflows – institutional sentiment flipped. In fact, just weeks after logging their best week of inflows ($3.2B), Bitcoin funds began hemorrhaging capital; about $1.3B flowed out of BTC ETFs over four consecutive days as confidence cracked[15]. These outflows from institutional products signaled a risk-off turn among big investors, further weighing on price.
In short, a combination of macro uncertainty, technical unwinding of leverage, and fear-driven selling led to Bitcoin’s rapid descent. The breakdown of the once-sturdy $100K floor not only erased billions in market value but also dealt a blow to the narrative of Bitcoin as an uncorrelated “safe haven.” Instead, Bitcoin traded “inextricably tied” to other speculative assets, behaving more like a leveraged risk-on investment rather than digital gold[16].
Market Psychology: From Greed to Fear
This crash has been psychologically jolting for market participants. Only a month ago, sentiment around Bitcoin was ebullient – greed and FOMO (fear of missing out) were running high as prices raced to new highs above $120K. Now, that euphoria has flipped to anxiety. The sudden fall through a major round-number threshold instilled “extreme fear” in the market[17].
Investor sentiment indexes corroborate this shift. The Crypto Fear & Greed Index, for example, likely swung from “Greed” into “Extreme Fear”, reflecting the pessimistic mood after the plunge. Analysts noted that as Bitcoin lost $100K, market sentiment deteriorated rapidly, with even mainstream media spotlighting the panic. Gold and silver prices surging simultaneously suggests some investors rotated into safe-havens, underscoring the risk-off mindset taking hold[18].
Why did confidence crumble so quickly? A big factor is the breach of a long-held support. Bitcoin had stayed above six figures for months, which bred a sense of security among traders. Breaking that support not only triggered automated selling but also a psychological blow – it invalidated many bullish narratives and price models in the short term. Traders who had “diamond hands” at $100K suddenly found themselves questioning if the uptrend was over. The velocity of the drop (nearly 20% in 30 days) and the sheer scale of liquidations (over a billion dollars in a day) further fueled a sense that “something fundamentally changed” in the market[5]. In essence, fear fed on itself: as volatility spiked, more traders rushed to the exits, reinforcing the downward spiral.
It’s also important to note the role of recency bias and expectations. Many investors had come to view Bitcoin’s strength above $100K as a new normal – some even touted it as a “digital safe haven” asset. That illusion was shattered as Bitcoin fell in tandem with Nasdaq stocks. Rather than acting as an inflation hedge or store of value, Bitcoin behaved like a high-beta tech stock, falling when risk sentiment soured[16]. This realization likely shook faith and injected cognitive dissonance into the community, contributing to the prevailing caution.
Yet, paradoxically, such extreme fear phases can set the stage for eventual recovery. Seasoned analysts point out that when sentiment is in the gutter but fundamentals remain intact, bottoms can form. For example, on-chain data has hinted that despite the fear, strong holders are quietly confident (more on that below). As one analyst observed, the current “extreme caution” in crypto feels similar to past troughs that preceded strong rebounds[19]. The key takeaway is that market psychology is cyclical: just as over-optimism can lead to unsustainable peaks, over-pessimism can create conditions for a relief rally once sellers are exhausted.
Retail vs. Institutional: Who’s Selling, Who’s Buying?
In every major crypto correction, different cohorts of investors respond in different ways. The recent Bitcoin crash is no exception – retail traders and institutional players appear to be behaving in almost opposite fashions.
On the retail side, there are signs of capitulation. Many individual investors (especially newer entrants) tend to buy during the hype and sell in panic when prices tumble. The broad market panic observed as BTC fell under $100K suggests a lot of retail money hitting the sell button, likely driven by stop-loss orders or sheer fear[4]. Social media chatter and exchange order book data often show smaller orders flooding in to sell during such cascades. This aligns with the idea that short-term speculators fled en masse, contributing to the intensified sell-off.
In contrast, some “smart money” and larger players are treating the dip as an opportunity. On-chain analytics reveal accumulation by long-term holders and whales even as prices slid. For instance, over the course of the crash, whales (addresses holding large amounts of BTC) added roughly 45,000 BTC to their holdings in a week[9], demonstrating conviction despite the fear. Likewise, Ethereum saw significant whale purchases – more than $1.3 billion of ETH was scooped up by major holders during the market lull[19]. Such accumulation in the face of bearish sentiment “suggests confidence beneath the fear”, as one analyst put it[20]. In other words, experienced investors with deep pockets often view sharp corrections as a chance to buy at a discount, taking the other side of panicked retail selling.
Interestingly, not all big investors were buyers at the top – some were sellers. Analysts have detected “measured profit-taking by long-term players” as Bitcoin hit its recent peak[21]. It appears that certain institutional or veteran holders sold portions of their stash above $120K, locking in profits after a prolonged uptrend. This behavior is typical in the late stages of a rally (sometimes called distribution phase), and it can foreshadow a cooling off. The fact that long-term holders were trimming positions in October while retail enthusiasm was peaking is a classic pattern – often dubbed the transfer from “strong hands” to “weak hands.” Now in November, that script has flipped: some of those same long-term players may be buying back in lower, while weaker hands have capitulated.
Data from investment funds supports this narrative of institutional ebb and flow. As mentioned, Bitcoin ETF funds saw record inflows followed by fast outflows around the peak[15]. In early October, institutions poured money into Bitcoin funds (perhaps anticipating a spot ETF approval or riding momentum). But once the tide turned, those funds saw an exodus of capital – a sign that institutional investors cut exposure quickly when market structure weakened. Retail investors, by contrast, often react slower, sometimes holding through downturns or unfortunately selling near bottoms out of fear.
It’s also worth noting that trading behavior diverged: while many retail traders got liquidated or sold at market prices during the chaos, larger players tended to scale into positions patiently. Some reports indicate that big buyers used methods like TWAP (time-weighted average price) or limit orders to accumulate without spiking volatility[22]. This patient approach contrasts with the emotional “get me out now” market orders retail might use when spooked.
Bottom line: Retail sentiment is largely bearish and defensive right now, whereas many institutions and crypto “whales” remain strategically optimistic – either holding through the storm or adding to positions at key support levels. This divergence can be healthy for the market’s longer-term stability: if coins move from shaky hands to strong hands, volatility can eventually settle. However, in the short term it means pain for latecomers who bought high, and a potential opportunity for contrarians who are buying low.
Regulatory Drama: U.S. Shutdown and Reopening Effects
The recent U.S. government shutdown saga has added another layer of complexity to Bitcoin’s market. For 42 days, through October and early November, the U.S. federal government was partially shut down – the longest in history[23]. This political stalemate had a two-fold impact on the crypto space:
1. Regulatory Delays: The shutdown effectively pumped the brakes on crypto-related regulatory progress in Washington. Agencies like the SEC (Securities and Exchange Commission) and CFTC were operating with skeletal staff, meaning reviews of Bitcoin ETF applications, rulemaking, and approvals were largely on hold[24][25]. A number of high-profile spot Bitcoin ETF filings (from firms like BlackRock, etc.) were pending at the SEC. During the shutdown, companies even explored procedural workarounds to launch products without explicit SEC nods[26] – highlighting how desperate the industry was for movement. The lack of regulatory clarity likely made larger investors cautious; uncertainty hung over the market since no one knew when these products would get the green light. In short, the shutdown created a regulatory vacuum at a critical time for crypto adoption in the U.S.
2. Market Sentiment and Data Blackout: Interestingly, when the government finally reopened (thanks to a short-term funding bill signed by President Trump in mid-November), many expected a relief rally in risk markets. Reopening meant federal agencies could resume normal operations – a positive for crypto in terms of getting ETF approvals and guidance back on track[24][25]. It also meant the flow of U.S. economic data (like jobs reports, inflation figures, etc.) would resume, which is crucial for the Fed and market forecasting. However, Bitcoin’s price showed little immediate reaction to the government restarting[27]. Despite historical instances where ending a shutdown coincided with crypto rallies, this time trading remained flat and cautious, indicating other factors were driving the market more[27]. One reason could be that the “data blackout” during the shutdown left the Federal Reserve flying somewhat blind, leading them to lean dovish until data catches up – a scenario that should favor Bitcoin[28]. But the overhang of recent liquidations and risk-off mood was too strong in the very short term, so the boost from the reopening was muted.
That said, the end of the shutdown is a longer-term tailwind for crypto. Analysts note that reopening the government “revives pending ETF approvals and crypto-related rulemaking, improving long-term regulatory clarity.”[29]. Indeed, within days of Congress funding the government, there were signs of renewed momentum: Congress scheduled a hearing for the new CFTC Chair nominee and published a draft of crypto market structure legislation[24][30]. The Treasury Department also resumed work on the GENIUS Act (a proposed stablecoin regulatory framework) which had been collecting dust during the shutdown[31]. All these steps suggest that the U.S. is getting back to ironing out crypto rules – a process that could unlock significant institutional demand if, for example, a spot Bitcoin ETF gets approved or clear laws are passed. The market’s lukewarm reaction now might belie the positive impact of regulatory clarity down the road.
Additionally, the resolution of the budget impasse means no immediate repeat of the drama until at least the next deadline (end of January 2026)[32][33]. This removes one short-term risk factor. However, caution remains: if Congress fails to agree on a longer-term 2026 budget, another shutdown looms, which could again delay crypto initiatives[33]. Investors are thus keeping one eye on D.C. politics. As one crypto CEO advised, it’s wise to “treat the current phase as a macro-led pause” – implying that until things like government spending, Fed policy, and ETF decisions clear up, big crypto bets should be tempered[22].
In summary, the U.S. regulatory landscape recently went from gridlock to reopening. The immediate price action in Bitcoin following the government’s reopening was underwhelming (Bitcoin still hovered around $102K, down ~19% from its peak)[34]. But the removal of that regulatory logjam and return of regulatory agencies is a subtle positive undercurrent. It might not halt a momentum-driven crash, but it could set the stage for new catalysts (like an ETF approval or clearer laws) that help restore confidence. For now, the market is in “wait and see” mode – digesting the fact that a supportive regulatory development (government reopening) coincided with a risk-off market, an unusual mix that reinforces how dominant market psychology and macro factors are in the short term.
Trump’s Influence: Sentiment Wildcard
No analysis of recent crypto market sentiment would be complete without addressing the role of President Donald Trump. As a polarizing figure with a loud megaphone, Trump’s comments and actions have had outsized impact on Bitcoin sentiment – both in this crash and over the past year.
Firstly, Trump’s involvement in ending the government shutdown was significant. By signing the funding bill to reopen the government, he alleviated one source of uncertainty[23]. Yet, as noted, Bitcoin didn’t bounce strongly on this news alone[27]. The market likely had already priced in a resolution, or was more preoccupied with global economic worries. Still, Trump touted the reopening as a win, and Congress immediately pivoted to crypto-related work, which the Trump administration has supported[24]. The President’s ability to sway policy (e.g., pushing regulators or shaping legislation) gives him indirect influence over crypto markets in a way few individuals have.
More directly, Trump’s own words about Bitcoin sway investor sentiment. Not long ago, Trump was one of Bitcoin’s fiercest critics. He infamously called Bitcoin “a scam” and a threat to the U.S. dollar’s supremacy[35][36]. Such remarks from a U.S. President can inject fear – for example, past comments in 2021 coincided with market dips amid worries that a hostile administration might crack down on crypto. Fast forward to 2024-2025, and Trump executed a remarkable pivot on crypto. During his campaign and into his second term, he went from skepticism to open embrace of cryptocurrencies. In mid-2025, Trump even claimed credit for Bitcoin’s success, boasting “I made crypto great again” and framing himself as the architect of a booming industry[37][38]. He spoke at crypto conferences and floated ideas like the U.S. government holding a “massive reserve of Bitcoin” as a strategic asset[39][38]. This pro-crypto stance – including the Genius Act stablecoin legislation passed under his watch – helped fuel optimism in the market[40][41]. Indeed, Bitcoin’s climb past $100K was partly amid excitement that the U.S. government, under Trump, might fully legitimize crypto or even invest in it.
However, Trump’s influence is a double-edged sword. His rhetoric can be mercurial. While he currently champions crypto as key to American dominance (even suggesting it’s better the U.S. dominates crypto than China does)[42][43], any hint of reversal or inconsistency can jolt markets. For instance, if he were to revert to calling Bitcoin a scam or if political considerations make him crack down despite earlier support, it would likely spook investors overnight. The crypto community is acutely aware that much of the recent policy support is driven by Trump’s persona – which means it could be fickle. This uncertainty can lead to higher volatility, as traders try to parse each comment for clues.
In the immediate crash scenario, Trump’s commentary played into the narrative in a few ways. Reports circulated that he criticized the froth in tech and crypto, warning about bubbles (aligning with the “AI bubble” fear) – comments like these reinforce the risk-off mood. On the other hand, as a populist, Trump also announced economic measures (like a potential tariff dividend stimulus) that briefly nudged crypto prices higher[44], since stimulus can be seen as bullish for speculative assets. The net effect is that Trump’s voice creates short-term bumps and dumps, contributing to the overall noise in sentiment.
Finally, one cannot ignore the ethical and conflict-of-interest angle: Trump’s family has been deeply involved in crypto ventures (from NFTs to launching tokens)[45][46]. The Trump Organization reportedly earned hundreds of millions from crypto projects in 2025[45]. This intertwining of political power and personal business in crypto is unprecedented – and it can color investor sentiment in peculiar ways. Some investors might feel reassured that the President has skin in the game (believing he’ll craft crypto-friendly policies to benefit those ventures). Others might worry it’s a house of cards or at least an overhyped scheme. The Reuters investigation revealed foreign investors poured money into Trump-linked tokens largely to gain favor, not due to tech merits[47][48]. If such projects were to falter, it could stain the broader crypto market’s reputation or invite regulatory scrutiny, injecting further volatility.
In summary, Trump talking about Bitcoin moves the needle – sometimes in positive ways (when he promises crypto-friendly policies, the market cheers), other times negatively (his past dismissals or any suggestion of clampdowns sparks fear). The President’s outsized role in the crypto narrative has become another factor traders must weigh. At the very least, Trump’s actions have raised crypto’s profile on the world stage, making Bitcoin part of national policy conversations rather than a fringe asset. That integration into the political zeitgeist means tweets or statements from leaders like him can trigger knee-jerk reactions in price. Investors and analysts will be closely watching what Trump says or does next regarding Bitcoin, as it remains a wildcard for market psychology.
Conclusion
The recent plunge of Bitcoin from its lofty ~$120K highs to below $100K is a lesson in how swiftly market dynamics can change. A confluence of factors – leverage unwinding, liquidity drying up, shifting sentiment, and macro-economic crosswinds – all contributed to a violent correction. Market psychology flipped from greed to fear, exemplifying the cryptocurrency’s notorious volatility. Retail investors, who often drive the emotional extremes, panicked at the breakdown of a major support, while many seasoned players saw an opening to accumulate at lower prices. This divergence between short-term sentiment and long-term conviction is a hallmark of Bitcoin’s historical cycles.
External forces have not been quiet either. The regulatory climate and political developments added both uncertainty and hope. The U.S. government’s shutdown and reopening illustrate that while regulatory clarity can bolster long-run confidence, it doesn’t provide immunity against broader risk-off moves. Meanwhile, high-profile voices like Donald Trump’s are double-edged – bolstering adoption and enthusiasm when favorable, but also injecting volatility and headline risk.
For the new reader or investor, the key takeaway is that Bitcoin’s journey is shaped by more than just code and charts. It’s driven by human emotions (fear and greed), the actions of whales and everyday traders, and an ever-evolving backdrop of policy and politics. As of now, Bitcoin sits at a crossroads: will underlying support and returning confidence spark a recovery, or will further macro and psychological pressures extend the decline?
Analysts remain divided, but many point to constructive signs such as continued institutional interest, long-term holders not wavering, and potential catalysts on the horizon (like anticipated ETF approvals or easier monetary policy)[19][22]. History has shown that periods of extreme fear often precede periods of regeneration in crypto. However, caution is warranted – as one expert advised, it’s wise to stay “light, liquid, and hedgeable” until a clearer trend reasserts itself[22]. In practical terms, that means monitoring key levels (e.g., $95K support and $110K resistance[49]), watching for stabilization in sentiment indicators, and keeping an eye on Washington and Wall Street for shifts that could tilt the scales.
Bitcoin has fallen below a milestone level, but it’s been here before in different figures – whether $10, $1000, or $20K, each big drop felt like the end of the world for crypto, only for Bitcoin to eventually come roaring back. The scale is larger now and the stakeholders more varied, but the fundamental push-and-pull between innovation and speculation, conviction and skepticism continues. As the dust settles from this crash, seasoned crypto participants will recall an old adage: the moment of maximum pain and fear is often when opportunity is greatest. Only time will tell if that holds true once again, but in the meantime, understanding the forces at play – from market psychology to macro policy – gives us a clearer roadmap through the turbulence.
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[6] [7] [10] [11] [13] [14] BTC, ETH, ADA, SOL Price News: Bitcoin Plunges Under $97,000, $880M in Liquidations
[8] [12] Bitcoin flash-crashed to $100k — then roared back. Here’s what really happened behind the $610M liquidations
[19] [20] [22] [28] [29] [34] US shutdown end spurs recovery in crypto markets; Bitcoin, Ethereum rebound | Cryptocurrency - Business Standard
[25] [27] [31] [32] [33] Trump move ends record US government shutdown as crypto regulation restarts | Bitget News
[36] Former US President Trump says Bitcoin a 'scam', calls it threat to ...
[44] Crypto Prices Rise as Trump Announces 'At Least' $2K Tariff ...
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