Bitcoin plunged below $89,600 on November 21, 2025, marking the first time since its ETF debut that every single U.S. spot Bitcoin ETF investor—retail and institutional alike—found themselves in the red. The price dropped to $83,510, a more than 3% slide in a single day, triggered by a $523 million outflow from BlackRock's iShares Bitcoin Trust (IBIT), the largest Bitcoin ETF with $87.63 billion in assets under management as of November 19. The broader picture? Total outflows from all 12 U.S. Bitcoin ETFs exceeded $2.8 billion in November alone, according to data from Glassnode and Equiti.com. This isn’t just a correction. It’s a systemic stress test.
Why This Matters: The Cost Basis Threshold Broke
The $89,600 level isn’t arbitrary. It’s the weighted average cost basis for every dollar poured into U.S. spot Bitcoin ETFs since their January 2024 launch. When Bitcoin soared past $100,000 in October, fueled by post-election optimism and Donald Trump’s crypto-friendly rhetoric, investors rode the wave. But now, with prices tumbling more than 30% from that peak, the entire ETF investor base is underwater. Even those who bought near the top in early November are now facing losses. For a market that promised institutional stability, this is a jarring reality check.The Liquidity Crunch: Market Makers Are Struggling
It’s not just about fear. It’s about broken mechanics. Tom Lee, head of Fundstrat Research, told CNBC the crypto market is being held hostage by liquidity providers who were never fully healed from the October 10, 2025 selloff. "They’re crippled," he said. "When prices fall, they’re forced to sell more to cover margin calls—creating a death spiral." He compared the current state to 2022, when it took six to eight weeks for market makers to recapitalize. "We’re six weeks in," Lee noted. "And this time, the dominoes are falling faster." That’s exactly what happened on November 20. A wave of redemptions from IBIT clients triggered a cascade. As market makers scrambled to offload Bitcoin to meet cash demands, they flooded the market. Prices dropped. More redemptions followed. Derivatives markets tightened. Bitcoin options are now pricing in a potential plunge to $80,000 by late December.Institutional Retreat: Risk Aversion Takes Over
The broader macro picture isn’t helping. Mike Treacy, head market analyst at Apex Fintec Solutions, pointed to the growing correlation between Bitcoin and growth stocks. "Both were riding the same Fed-rate-cut hopes," he explained. "Now that Jerome Powell signaled a December cut isn’t guaranteed, the whole risk-on trade is unwinding." Dan Coatsworth of AJ Bell put it bluntly: "If investors are fleeing tech stocks, they’re not going to double down on Bitcoin. It’s the riskiest asset on the board." Institutional investors, once eager to buy into crypto ETFs as a hedge against inflation, are now prioritizing capital preservation. Outflows aren’t just from retail panic—they’re from pension funds, hedge funds, and family offices pulling back.Long-Term Faith Still Exists
Despite the carnage, the foundation hasn’t collapsed. Cash2Bitcoin.com reports that since launch, U.S. Bitcoin ETFs have absorbed $54.75 billion in inflows—roughly 6.5% of all Bitcoin ever mined. That’s not small. And volatility has dropped by 55% since ETFs arrived, proving they’ve brought order to chaos. The iShares 2025 'People & Money' Survey found that 47% of new ETF investors plan to add crypto ETPs to their portfolios—higher than the 36% of existing ETF holders. That suggests the appetite isn’t dead, just paused. Major banks still see long-term upside. Standard Chartered raised its Bitcoin target to $150,000 with a $500,000 long-term forecast. JPMorgan still bets on $130,000, citing Bitcoin’s "digital gold" narrative. Both point to ETF flows as the real driver—not speculation.
What’s Next? The Waiting Game
The market is now waiting for one of two things: either a Fed pivot that reignites risk appetite, or a liquidity recovery from market makers. Lee’s 6–8 week timeline suggests we’re nearing the end of the repair phase. If Bitcoin stabilizes above $80,000 by mid-December, institutional buying could return. Meanwhile, regulatory frameworks are holding steady. The European Union’s MiCA regulation and the SEC’s continued approval of crypto ETFs signal that the U.S. and EU aren’t backing away—they’re just taking a breath. Fintech firms are still building compliance tools, betting this dip is temporary.Historical Echoes
This isn’t the first time crypto faced a liquidity crisis. In 2022, after the Terra collapse, similar patterns emerged: market makers collapsed, ETFs bled, and prices cratered. But by early 2023, Bitcoin rebounded to $40,000. The difference this time? The institutional footprint is far larger. And the regulatory guardrails are stronger.The lesson? Bitcoin ETFs didn’t make the market immune. They made it more transparent—and more vulnerable to systemic shocks. But they also made it harder to kill.
Frequently Asked Questions
Why did BlackRock’s IBIT trigger such a big price drop?
IBIT holds nearly $88 billion in assets, so a $523 million outflow in one day forced market makers to sell a massive volume of Bitcoin to meet redemptions. This sudden supply surge overwhelmed demand, especially since liquidity was already thin after the October 10 selloff. The scale of IBIT’s holdings means even small investor moves can swing the market.
Are retail investors selling too, or is this purely institutional?
It’s both. While institutional redemptions drove the initial wave, retail investors followed suit as fear spread. Data from Coinbase and Kraken show retail outflows increased by 22% week-over-week in late November. But unlike institutions, retail investors are more likely to buy back in at lower levels—especially if Bitcoin stabilizes near $80,000.
What does the $89,600 cost basis mean for future price recovery?
That number represents the average entry price for every Bitcoin bought through ETFs. For the market to turn positive again, Bitcoin needs to climb above that level—not just to make ETF holders profitable, but to restore confidence in the ETF structure itself. Historically, once an asset regains its average cost basis, it often triggers renewed inflows as investors see the risk-reward shift.
Could Bitcoin fall to $80,000 by December?
Derivatives markets are pricing that probability in—options contracts suggest a 68% chance Bitcoin trades below $80,000 by December 20. But that’s not a prediction, it’s a market sentiment gauge. If the Fed signals a December rate cut or if market makers stabilize their balance sheets, the downward pressure could ease quickly. The $80K level is more a psychological floor than a fundamental one.
Is this the end of Bitcoin ETFs as a growth vehicle?
Absolutely not. ETFs have permanently changed Bitcoin’s access model. Even with $2.8 billion in outflows, total inflows since launch still stand at $54.75 billion. The iShares survey shows new investors are still interested. This is a correction, not a collapse. The real question isn’t whether ETFs matter—it’s whether the market can rebuild its liquidity infrastructure fast enough to avoid deeper pain.
How does MiCA in Europe affect U.S. Bitcoin ETFs?
MiCA doesn’t directly impact U.S. ETFs, but it signals global regulatory legitimacy. As European banks and asset managers build compliant crypto products under MiCA, they’re more likely to invest in U.S. ETFs too. This cross-border confidence helps stabilize long-term demand, even during U.S.-led sell-offs. It’s a silent backstop.
