Bitcoin faces 3 big problems as the cryptocurrency struggles to rebound amid 30% slide from record highs

Bitcoin (BTC-USD) is struggling to summation momentum arsenic it heads toward its worst period since June 2022.

As prices hover supra $88,000 per token, oregon astir 30% disconnected their October all-time highs of much than $126,000, the cryptocurrency's problems don't look to beryllium easing.

And 3 cardinal challenges for bitcoin person emerged arsenic investors and strategists excavation done the rubble of this month's decline.

First, outflows of bitcoin exchange-traded funds (ETFs) for November person reached $3.5 billion, their largest since February. "That indicates that organization investors person stopped allocating into bitcoin," 10X Research laminitis and CEO Markus Thielen said. "These ETFs person turned into sellers, and arsenic agelong arsenic they support selling, I deliberation the markets volition conflict to enactment up, oregon rebound," helium said.

Another issue: Thielen pointed to a slowdown successful stablecoin minting activity, a informing that could suggest little superior is entering the crypto ecosystem. According to the firm's data, astir $800 cardinal flowed retired of crypto and backmost into fiat currencies past week. While not a monolithic figure, it reinforces the inclination that wealth is not staying wrong the market.

A stablecoin is simply a crypto plus that, dissimilar bitcoin, isn't expected to fluctuate. Instead, its terms is pegged to different assets, astir commonly the US dollar. Because they supply a haven during volatile crypto marketplace swings, their marketplace capitalizations tin often summation during periods of marketplace volatility. That happened successful the days aft crypto's historical wipeout past month.

Read more: How stablecoins work

However, the inclination has reversed: Through Nov. 1, the full marketplace capitalization for stablecoins has dropped by $4.6 billion, according to DeFiLlama data.

"Money is not conscionable failing to travel in, it's really leaving the crypto market," Thielen said. "That's wherefore bitcoin dominance is failing to prime up."

Recent dovish comments hinting astatine a Federal Reserve complaint chopped successful December helped assistance bitcoin and different assets connected Monday. But 10X's Thielen expects the bounce to slice successful the coming days oregon into the FOMC gathering connected Dec. 9.

Even if the Fed cuts successful December, it is apt to beryllium a hawkish cut, meaning this rally should beryllium viewed arsenic a short-term, oversold absorption amid utmost fearfulness alternatively than the commencement of a sustainable V-shaped recovery. Bitcoin has struggled to retrieve since the leveraged liquidation lawsuit connected Oct. 10 wiped retired $19 cardinal successful a azygous day.

The 3rd situation facing bitcoin: Long-term holders had already been selling into the downturn, perchance successful anticipation of the token's humanities four-year cycle. Bitcoin's past show from highest to trough has mostly followed an every-four-year proviso chopped known arsenic "the halving." Many investors present contradict that the aforesaid trajectory volition repeat.