Around 23:00 on November 3rd, the cryptocurrency market experienced another "plunge", with Bitcoin, Ethereum, and several major altcoins seeing short-term rapid declines. Bitcoin briefly fell below $106,000, down over 4% in 24 hours; Ethereum briefly fell below $3,600, down over 7% in 24 hours. In the past 24 hours, total liquidations reached $1.285 billion, with long positions liquidated at $1.161 billion and short positions at $124 million.

Since the start of November, the anticipated market rebound has failed to materialize, with prices instead continuing to decline and experiencing another "plunge". What factors are driving the intensifying market panic? Has this bull cycle entered its final stage? Is the market about to bottom?

I. Cryptocurrencies Plunge Again from Evening to Early Morning

Around 23:00 yesterday, the cryptocurrency market saw another "plunge", with Bitcoin, Ethereum, and several major altcoins experiencing short-term rapid declines. After midnight, the crypto market saw a slight rebound but lacked upward momentum and fell again. Bitcoin fell below $106,000, briefly touching $105,306.56, with a 24-hour decline exceeding 4% and a 1-hour amplitude of 2.44%. Ethereum fell below $3,600, briefly touching $3,558.82, with a 24-hour decline exceeding 7% and a 1-hour amplitude of 4.21%. Mainstream coins like BNB, SOL, and LTC also saw significant short-term drops. Data shows that today's Fear & Greed Index dropped to 21, changing its status from Fear to Extreme Fear.

Coinglass data shows that in the past 24 hours, total liquidations reached $1.285 billion, with long positions liquidated at $1.161 billion and short positions at $124 million. Bitcoin liquidations were $326 million, Ethereum liquidations were $335 million, and Solana liquidations were $155 million.

This short-term cryptocurrency "plunge" has cast another shadow over the recently increasingly panicked market.

II. DeFi Protocol Balancer Attacked, Triggering Market Panic

Yesterday afternoon, the DeFi protocol Balancer was reported to have been attacked, with the protocol's treasury address transferring out a large amount of assets including WETH, Staked ETH, and wstETH. According to Lookonchain monitoring, the loss from the Balancer protocol attack has reached $116.6 million. Balancer officially stated that Balancer V2 Composable Stable Pools experienced an attack. As these pools have been running on-chain for years, many have exceeded the pausable time window. All currently pausable pools have been paused and are in recovery mode. Other Balancer pools are unaffected. This issue is limited to V2 Composable Stable Pools and does not affect Balancer V3 or other pool types. The engineering and security teams are prioritizing the investigation. Balancer also stated that it is willing to pay 20% of the stolen assets as a white hat reward for their recovery, valid for 48 hours.

Furthermore, GoPlus posted on social media that all DeFi projects forking Balancer are affected by this vulnerability, and multiple protocols have already been attacked. It recommends that investors check the list of Balancer forked protocols on the Defillama website, immediately stop interacting with them, and withdraw assets promptly to protect themselves. Hasu, Flashbots Strategy Director and Lido Strategy Advisor, stated that Balancer v2 launched in 2021 and has since become one of the most watched and frequently forked smart contracts. This is very concerning. Every time a contract that has been live for so long is attacked, it justifiably sets back DeFi adoption by 6 to 12 months.

As a major DeFi protocol that has been live for years, the negative impact of the Balancer attack is widespread, once again raising doubts about the security of DeFi protocols. This event may have also triggered market panic, stimulating the short-term rapid decline in the crypto market.

III. Continuous ETF Outflows, Institutional Investors Temporarily Withdraw

Farside Investors data shows that last week, US Bitcoin spot ETFs saw a net outflow of $799 million, and Ethereum spot ETFs saw net outflows for three consecutive days last week, totaling $363 million. Additionally, Lookonchain monitoring shows that yesterday, 10 Bitcoin ETFs had a net outflow of 1,987 BTC (worth $213.65 million), and 9 Ethereum ETFs had a net outflow of 21,022 ETH (worth $78.2 million). CryptoQuant posted that Bitcoin's recovery lacks the sustained inflows from ETFs and Michael Saylor's strategy, which are the main demand drivers. Furthermore, Matrixport analysis stated that Ethereum ETFs have again performed flatly, with Bitmine being practically the only institution consistently buying. Inflows plummeted to just $300 million and $600 million in September and October respectively, with little continuation afterwards.

The continuous net outflows from ETFs reflect, to some extent, the temporary withdrawal of institutional investor funds, causing the crypto market to temporarily lose one of the main drivers of this bull run's rise.

IV. Whale Investors Liquidated, Increasing Market Volatility

Large whale investors' previously held large long positions were forcibly liquidated. Lookonchain monitoring shows that the "100% Win Rate Whale's" winning streak has now ended, closing all Bitcoin long positions at a loss while continuing to reduce ETH and SOL long positions. His total P&L changed from +$33 million to –$17.6 million. Subsequently, the "100% Win Rate Whale" returned to going long, depositing $20 million USDC into Hyperliquid. He immediately established long positions with two large market orders: 150 Bitcoin (approx. $15.8 million) and 5,000 Ethereum (approx. $17.9 million).

Onchain Lens monitoring showed that "Machi Big Brother" Jeffrey Huang's 25x leveraged Ethereum long position was completely liquidated, bringing his total losses to $15 million. On-chain analyst @ai_9684xtpa also showed that Huang's account now has only $16,771.24 left. Since October, he has replenished a total of 1.727 million USDC to Hyperliquid, which is almost entirely lost, with cumulative losses in his Hyperliquid account reaching $13.33 million.

The forced liquidation of whale investors' large long contracts during the decline, and their quick return to long positions, this frequent leveraged contract trading, exacerbates the short-term volatility of the crypto market.

V. Increased Uncertainty in Macro Factors Like Fed Rate Cuts

With the Fed's October rate cut settled, the market has refocused its attention on expectations for a December rate cut. However, the unexpectedly "hawkish" stance previously expressed by Fed Chair Powell and the internal divisions reflected in the Fed FOMC statement have continuously weakened market expectations for a December Fed rate cut. CME "FedWatch" data shows: the probability of a 25 basis point rate cut in December is 67.3%, and the probability of maintaining rates unchanged is 32.7%. The probability of a cumulative 25 basis point cut by the Fed by next January is 55.8%, the probability of maintaining rates unchanged is 21.8%, and the probability of a cumulative 50 basis point cut is 22.3%.

Several Fed governors also have differing opinions on whether to cut rates in December. Cook said a December rate cut is possible but will depend on subsequent incoming information. Milan said current monetary policy remains too tight and increases the risk of an economic downturn. Bostic said a December rate cut is not a foregone conclusion. Although the market holds strong expectations for a year-end rate cut, Powell was wise to clearly state that a December cut is not a done deal.

Additionally, the US government "shutdown" crisis persists, and its negative impact on the macroeconomy remains. Goldman Sachs economist Alec Phillips warned that a US government shutdown could cause the largest economic impact ever, potentially lasting longer than the 35-day shutdown in 2018-19 and affecting more agencies. A six-week shutdown could reduce Q4 GDP growth by 1.15 percentage points, with a rebound not expected until early 2026. US Treasury Secretary Besant also said the US government shutdown has begun to affect the US economy.

Weakened market expectations for a December Fed rate cut, along with the ongoing US government "shutdown" crisis, have increased macroeconomic uncertainty, which also affects the crypto market.

VI. Has the Market Entered Its Final Stage? Future Direction Predictions

After this cryptocurrency "plunge", whether the bull market has reached its end and what happens next are being interpreted by the market.

1. CryptoQuant posted that despite an $8 billion increase in Bitcoin's realized cap, Bitcoin's recovery lacks the sustained inflows from ETFs and Michael Saylor's strategy, which are the main demand drivers.

2. Matrixport released a chart analysis stating that Ethereum ETF performance is flat. After strong inflows of $5.2 billion and $4.3 billion in July and August respectively, inflows plummeted to just $300 million and $600 million in September and October, with little continuation afterwards. Without new institutional demand, Ethereum remains vulnerable to further consolidation, or even a deeper correction.

3. Katie Stockton, Founder and Managing Partner of Fairlead Strategies, stated in a report that Bitcoin has broken below the 200-day moving average at $109,800. The 200-day moving average is one of the most widely watched indicators for defining long-term trends and also acted as support for Bitcoin. This may indicate further downside for the cryptocurrency, with the next target potentially around $94,200.

4. Singapore-based crypto investment firm QCP Capital posted an analysis stating that the crypto market started unsteadily, continuing its downward trend. On-chain data shows OG holders moving large amounts of Bitcoin to Kraken, a continuation of the persistent outflows seen in October. The recent sell-off lacks clear macro drivers, even as other risk assets perform well amid policy tailwinds. Bitcoin's choppy consolidation has sparked speculation about whether this cycle is nearing its end. Whether this signals the arrival of a new crypto winter remains unclear. Currently, long-term holders are taking profits, while institutional inflows and application promotion are consolidating the market foundation.

5. Crypto analyst @IamCryptoWolf posted on X platform that ETH is undergoing an expanding wedge retest, where previous resistance now acts as solid support. November looks set for steady consolidation, with a potential breakout towards the end of the month, accelerating gains in December.

6. BitMine Chairman Tom Lee, in an interview with CNBC, stated that Ethereum's current fundamentals are performing well, with stablecoin transaction volume and application layer revenue both hitting record highs, and price breakthroughs will follow. Tom Lee reiterated his previous year-end price prediction, expecting Bitcoin to rise to the $150,000-$200,000 range, and Ethereum to rise to $7,000.

7. Crypto analyst Ali stated, "$3,120 is a key demand zone for ETH, where 2.62 million ETH were accumulated in this area."