Bitcoin Price Drops Below $106,505.22: Understanding the Current Market Trends
Bitcoin fell below $106,505.22 on November 3, down 3.6% in 24 hours, as a stronger U.S. dollar and continued ETF outflows pressured cryptocurrencies across the board. At press time, Bitcoin has lost this key support level and is now trading consistently below $104,000 for the first time since June.
Ethereum is trading at $3,490, down 9%, while Solana fell 13% to $159. XRP, Cardano, Dogecoin, and BNB each posted double-digit losses. The DXY dollar index was trading at 99.886 at press time, up 0.2% and near a three-month high, after gaining 0.8% on a weekly basis.
Impact of Dollar Strength on Bitcoin
The strength of the dollar usually weighs on Bitcoin as cryptocurrencies act as non-yielding alternative assets. When the dollar rises, investors turn to dollar-denominated instruments that offer positive real returns, reducing demand for Bitcoin and other digital assets. Additionally, traders positioned themselves defensively ahead of this week’s release of US economic data, following the Federal Reserve’s hawkish tone in its recent policy statement.
The week features several impactful reports. The ISM manufacturing data will be released on November 3rd, and the services PMI and ADP employment figures will be released on November 5th. The week ends on November 7th with the report on non-farm payrolls, the most closely watched indicator of the labor market. University of Michigan consumer sentiment data, also due on Nov. 7, rounds out a data-heavy schedule that will influence the Federal Reserve’s policy expectations and the direction of the dollar.
ETF Outflows and Derivatives Liquidations
Adding to the selling pressure, US spot Bitcoin ETFs recorded $1.15 billion in cumulative outflows as of October. According to Farside Investors, October 29-31. This increased selling pressure at the start of November. These withdrawals removed a layer of structural support that had absorbed sales from crypto-native participants during previous market declines, as ETF flows acted as demand stabilizers.
Liquidation of derivatives added to the decline. CoinGlass data shows that nearly $1.15 billion in long positions were liquidated in the last 24 hours, with about $330 million concentrated in Ethereum futures after ETH fell below the $3,900 threshold. Liquidations occur when leveraged traders’ positions are automatically closed when prices move against them, resulting in forced selling that accelerates bearish momentum.
Market Outlook
The combination of macroeconomic headwinds, dollar strength coupled with the Fed’s hawkish stance, and pressure on market structure from ETF outflows and derivatives liquidations created conditions in which selling increased in the spot and futures markets. This week’s US economic data releases will determine whether the dollar maintains its recent strength. Any reversal in DXY would ease pressure on Bitcoin and the broader crypto markets.
Until then, digital assets are vulnerable to continued volatility due to the lack of ETF inflows and the overhang of liquidated leveraged positions. For more information on the current market trends and analysis, visit https://cryptoslate.com/over-1-billion-in-liquidations-why-is-bitcoin-down-today/
