Crypto's Rough November: Volumes Drop to $1.6 Trillion, ETFs Lose $3.5 Billion

Crypto markets wrapped up November with their most significant decline since February, as trading volumes fell to $1.59 trillion and Bitcoin exchange-traded funds (ETFs) saw net outflows of $3.48 billion.

Key Takeaways

November was the most challenging month for crypto since February, with $1.59 trillion in exchange volumes.
Bitcoin prices fell dramatically after reaching an all-time high of $126,251, leading to significant liquidations.
Centralized exchanges saw decreasing volumes, while decentralized exchanges suffered even steeper drops.
Speculation around a possible rate hike by the Bank of Japan contributed to market volatility.
U.S. Bitcoin ETFs experienced significant net outflows, signaling growing concerns in the market.

This comprehensive overview highlights the current struggles in the cryptocurrency market and the factors contributing to the decline, providing key insights for investors and enthusiasts alike.

The downturn in the market intensified on Monday when Bitcoin plummeted below $86,000, causing over $600 million in leveraged positions to be liquidated. This decline stemmed from a gradual drop in value that began weeks prior, following a peak of $126,251, marking its all-time high.

Crypto's Worst Month Since February: Volume Sinks to $1.6T, ETFs Bleed $3.5B

According to data from The Block, trading activity across centralized exchanges decreased by 26.7% from October’s $2.17 trillion, which is the lowest trading volume recorded since June's $1.14 trillion.

Crypto's Worst Month Since February: Volume Sinks to $1.6T, ETFs Bleed $3.5B

Binance remained the leading exchange with $599.34 billion in volume for November, down from October’s $810.44 billion. Other exchanges like Bybit processed $105.8 billion, Gate.io managed $96.75 billion, and Coinbase reported $93.41 billion that month.

DEXs Experience Significant Declines

Volumes for decentralized exchanges (DEXs) reflected the overall market pullback, decreasing to $397.78 billion from October’s $568.43 billion, which is the lowest monthly total seen since June, based on data from DefiLlama.

Crypto's Worst Month Since February: Volume Sinks to $1.6T, ETFs Bleed $3.5B

Uniswap led the DEX market with $79.98 billion in November volume, down from $123.88 billion the month before, while PancakeSwap recorded $70.57 billion compared to October’s $102.02 billion.

The ratio of DEX to centralized exchange volume fell to 15.73% in November, down from 17.56% in October, indicating a continuing trend towards centralized exchanges during a time of unstable market conditions.

Bitcoin’s price witnessed considerable volatility, starting the month around $110,000 and dropping to a low near $81,000 on November 21, before a slight recovery followed.

In the latest trading sessions, Bitcoin was under pressure, decreasing by 6% to $85,616, marking a 32% drop from the October high.

The selloff resulted in liquidations amounting to $564.3 million in long positions, with Bitcoin alone accounting for $188.5 million and Ether for $139.6 million, pushing the total market liquidations above $641 million across both short and long positions.

BOJ Rate Hike Speculations Cause Market Turbulence

Speculations regarding a potential rate hike by the Bank of Japan (BOJ) in December were a significant factor behind Monday’s market crash.

Predictions from Polymarket suggest a 52% likelihood of a 25-basis-point increase at the BOJ’s meeting on December 18-19, while bond investors believe the probability stands at 76%, as observed by analysts tracking Japanese yields.

“Bitcoin’s drop is due to the BOJ considering a rate hike in December,” noted BitMEX co-founder Arthur Hayes in a post on X, where he explained that a USD/JPY rate between 155 and 160 “signals a hawkish BOJ."

Japanese two-year yields rose to their highest level since 2008, and the strengthening yen raised concerns regarding the unwinding of the extensive carry trade—an investment strategy involving borrowing yen to acquire risk assets, including cryptocurrencies.

“Increasing base rates in Japan and a stronger Yen lead to a selling pressure on risk assets,” remarked Coinbureau’s CEO Nic, recalling how a surprise rate hike in August 2024 prompted a 20% crash in Bitcoin to $49,000 and $1.7 billion in liquidations.

Polling conducted by Reuters revealed that 53% of economists anticipate a rate increase, driven by factors like imported inflation risks and diminishing political pressures to maintain lower rates.

ETF Withdrawals Exacerbate Market Weakness Amid Corporate Bitcoin Concerns

U.S. spot Bitcoin ETFs saw their biggest monthly outflow since February, with a total of $3.48 billion withdrawn, reversing the $3.42 billion inflows recorded in October, according to SoSoValue data.

Crypto's Worst Month Since February: Volume Sinks to $1.6T, ETFs Bleed $3.5B

BlackRock’s IBIT was at the forefront of these outflows, with $2.34 billion withdrawn in November, which included a record single-day withdrawal of $523 million on November 18.

Despite the substantial outflows, the total net inflow for U.S. Bitcoin funds sits at $57.71 billion as of November 28, with $119.4 billion in net assets, making up 6.56% of Bitcoin’s total market capitalization.

Crypto's Worst Month Since February: Volume Sinks to $1.6T, ETFs Bleed $3.5B

Spot Ethereum ETFs also faced significant outflows, with $1.42 billion being withdrawn—the highest monthly figure on record. However, new altcoin products, such as XRP ETFs, managed to buck the trend, achieving cumulative inflows of $666 million.

Additional challenges arose as Strategy Inc. hinted at the possibility of selling Bitcoin if its managed net asset value (mNAV) ratio turns negative, as reported by Bloomberg.

“We might sell Bitcoin if necessary to cover our dividend payments below 1x mNAV,” stated CEO Phong Le, confirming that this would be a last resort and noting the decline in their mNAV, which has dropped to 1.19 from their $56 billion Bitcoin reserves.