Bitcoin Plunge to $80,500 Triggers $2 Billion Liquidation Event as ETF Outflows Hit Near-Record Highs

Retail Panic and Macroeconomic Jitters Fuel Massive Market Reset Before Rate-Cut Optimism Returns

TL;DR

• Bitcoin plummeted to a local low of $80,500, wiping out nearly $2 billion in leveraged positions and pushing the global coin market cap below the $3 trillion threshold.
• U.S. spot bitcoin ETFs suffered a staggering $903.11 million in daily net outflows, led by BlackRock’s IBIT, as analysts identify retail selling as the primary driver of the correction.
• A swift recovery above $85,800 followed dovish comments from Federal Reserve officials, which reignited hopes for a December rate cut and reversed earlier pessimism caused by strong jobs data.

Friday’s trading session unleashed one of the most severe market flushes of the year, sending the crypto price of Bitcoin spiraling down to a local bottom of $80,500. This violent downward move forced the total capitalization of the digital asset sector to breach the psychological $3 trillion mark for the first time since the spring of 2025. 

The sheer velocity of the sell-off triggered a cascade of forced closures across derivatives platforms, resulting in nearly $2 billion worth of leveraged positions being liquidated within a single 24-hour window. Data reveals that the carnage affected over 396,000 individual traders, with the most significant single loss occurring on the Hyperliquid decentralized exchange, where a whale position valued at $36.78 million in BTC-USD was instantaneously wiped out. Market sentiment deteriorated rapidly alongside price action, with the "Crypto Fear & Greed Index" collapsing to a score of 11, signaling a state of extreme distress among participants.

The groundwork for this correction was laid on Thursday, when U.S. spot bitcoin exchange-traded funds recorded their second-largest daily net outflow in history, totaling $903.11 million. BlackRock’s IBIT fund, typically a bastion of inflow stability, led the exodus with $355.5 million leaving the product. This was closely followed by Grayscale’s GBTC and Fidelity’s FBTC, which saw outflows of $199.35 million and $190.4 million, respectively. The bearish sentiment was not isolated to Bitcoin; Ethereum spot ETFs also bled $261.6 million. 

Interestingly, the chaos did not deter interest in newer altcoin products, as Bitwise’s XRP fund attracted $105 million on its launch day, and Solana ETFs managed to secure $23.66 million in positive flows. Analysts at JPMorgan suggest this divergence indicates that the correction is being driven almost exclusively by retail panic selling of crypto ETFs, rather than a broader institutional retreat, noting that retail investors continued to pour approximately $96 billion into equity ETFs throughout November.

Macroeconomic factors further exacerbated the risk-off environment earlier in the week. Delayed non-farm payroll data for September shocked the market by showing the U.S. economy added 119,000 jobs, more than double the estimated 50,000. This robust economic signal initially dampened the crypto price index, as traders scaled back their expectations for a Federal Reserve interest rate cut. 

Compounding the uncertainty were tremors from the traditional tech sector, where AI giant Nvidia reported a concerning spike in accounts receivable to $33.4 billion despite strong revenue growth. This "red flag" regarding potential demand softening sent Nvidia shares tumbling 3.15%, dragging the Nasdaq and S&P 500 down with it and deepening the correlation between volatile tech stocks and the broader coin market cap.

Despite the severity of the drop to $80,500, the market staged a resilient recovery by late Friday, with Bitcoin climbing back above the $85,800 level. The reversal was catalyzed by comments from New York Fed President John Williams, who adopted a dovish tone suggesting that current borrowing costs might be too restrictive. His remarks immediately shifted the probability of a December rate cut back to approximately 71%, effectively neutralizing the bearish impact of the jobs report. 

Market observers, including the co-founders of Glassnode, characterized the crash as a "mechanical unwind" driven by forced sellers rather than a fundamental shift in the asset's value proposition. Meanwhile, research from Bitwise Europe indicates the market is currently testing a "max-pain" zone between $73,000 and $84,000, a range that represents the cost basis for major institutional holders like MicroStrategy and BlackRock, suggesting a classic cycle reset may be underway.

This article has been refined and enhanced by ChatGPT.