The recent crypto sell-off was triggered by a deepening DeFi crisis and macroeconomic uncertainties, pushing Bitcoin below $104,000 to $103,849, a 3.2% daily drop. High leverage liquidations reached $1.37 billion, signaling a risk-off sentiment across the market.
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DeFi Contagion: Stream Finance reported $93 million in asset losses, contributing to fears of broader instability in lending protocols.
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Macro Pressures: Weak U.S. jobs data and Federal Reserve hawkishness amplified the sell-off, affecting traditional and crypto assets alike.
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Leverage Flush: $1.37 billion in liquidations over 24 hours, per CoinGlass data, may clear excess positions for potential recovery.
Crypto sell-off intensifies as Bitcoin dips below $104K amid DeFi woes and macro fears. Explore causes, impacts, and recovery signs in this analysis. Stay informed on market shifts.
What Caused the Recent Crypto Sell-Off?
Crypto sell-off intensified on Tuesday as Bitcoin fell below $104,000 for the first time since late June, reaching $103,849—a 3.2% decline in 24 hours, according to CoinGecko data. This downturn stems from a confluence of DeFi sector vulnerabilities and macroeconomic headwinds, prompting widespread liquidations and a risk-off posture among investors. Major altcoins like Ethereum, XRP, BNB, and Solana also saw losses between 5% and 9%.
How Is the DeFi Crisis Impacting the Crypto Market?
The DeFi crisis has eroded investor confidence, with Stream Finance disclosing $93 million in fund asset losses on Monday, as noted by Derek Lim, Head of Research at Caladan. Total bad debt across lending markets stands at an estimated $284 million, fueling contagion fears that have spread to stablecoins and vaults, leading to forced redemptions. Lim highlighted prior incidents, including the $128 million Balancer exploit and October’s massive liquidation event, which had already weakened the sector. “Confidence was already shot before Stream imploded,” Lim stated, emphasizing that high leverage amplifies any catalyst into a full risk-off event. This internal pressure is compounded by external factors, such as bond market volatility, making DeFi a focal point for the broader crypto sell-off.
Frequently Asked Questions
What triggered the $93 million loss at Stream Finance?
Stream Finance’s $93 million fund asset loss was disclosed by an external fund manager on November 4, 2025. The protocol is engaging Keith Miller and Joseph Cutler from Perkins Coie LLP to conduct a comprehensive review. This event has heightened DeFi contagion fears, contributing to market-wide liquidations exceeding $1.37 billion, per CoinGlass.
Will the crypto sell-off lead to a sustainable recovery?
The ongoing crypto sell-off reflects de-risking amid uncertainty, but analysts like Ryan Lee, Chief Analyst at Bitget, suggest the leverage flush could reset valuations. Once liquidity stabilizes and DeFi issues are contained, stronger accumulation may follow. Market sentiment, as shown by Myriad’s prediction data, currently leans bearish with a 71% chance of Bitcoin hitting $100,000 next.
Key Takeaways
- DeFi Vulnerabilities Exposed: Stream Finance’s $93 million loss and $284 million in bad debt underscore ongoing risks in lending protocols, per Caladan research.
- Macroeconomic Overlap: U.S. jobs weakness and Federal Reserve signals have driven risk assets lower, with Bitcoin down 17.5% from its October high, according to CoinGecko.
- Path to Recovery: Liquidations totaling $1.37 billion may clear leverage, enabling sustainable growth if sentiment improves, as noted by Bitget analysts.
Conclusion
The crypto sell-off driven by DeFi crises and macroeconomic fears has pushed Bitcoin to $103,849, with altcoins following suit amid $1.37 billion in liquidations. Sources like CoinGecko and CoinGlass highlight the severity, while experts from Caladan and Bitget point to potential stabilization once contagion is contained. As volatility persists, investors should monitor DeFi developments and economic indicators closely for signs of a more balanced market rebound.
The cryptocurrency market’s downturn extended into Tuesday, with Bitcoin’s price slipping further amid heightened concerns. At publication, Bitcoin traded at $103,849, marking a 3.2% decrease over the past 24 hours, based on data from CoinGecko. This positions it 17.5% below the record high achieved in early October. The sell-off has rippled through the sector, affecting key altcoins such as Ethereum, down 7.1%; XRP, off 6.3%; BNB, declining 5.8%; and Solana, dropping 9.2% in the same period.
Liquidations have surged dramatically, totaling $1.37 billion in the last 24 hours according to CoinGlass figures. This spike underscores the unwinding of leveraged positions as traders respond to mounting pressures. Market sentiment has shifted notably bearish, evidenced by the annualized futures premium on major exchanges falling from about 7% to under 4% in the past week, per Velo data. Investors appear reluctant to pay premiums for optimistic positions, reflecting broader caution.
Prediction market Myriad, operated by Dastan’s platform, captures this mood: the Greed index dropped from 59% on November 1 to 51.9%. Participants now assign a 71% probability to Bitcoin reaching $100,000 rather than $120,000, up from 44% on November 3. Such indicators paint a picture of diminished enthusiasm and increased pessimism.
At the core of this turmoil lies a crisis in decentralized finance, as explained by Derek Lim of Caladan. The DeFi protocol Stream Finance revealed $93 million in asset losses from its funds on Monday morning. Combined with an estimated $284 million in total bad debt across lending markets, this has ignited widespread contagion fears. Multiple stablecoins and vaults now face exposure, prompting forced redemptions and further instability.
Lim connects this to a series of recent setbacks that have steadily undermined trust. The $128 million exploit at Balancer remains fresh, alongside the echoes of October’s unprecedented liquidation cascade. “Any catalyst is going to amplify the risk-off in a system that still contains very high amounts of leverage,” Lim observed. The disclosure from Stream Finance, shared via their official channels on November 4, 2025, detailed the involvement of an external fund manager and the engagement of legal experts Keith Miller and Joseph Cutler from Perkins Coie LLP for a thorough investigation.
Ryan Lee from Bitget describes the episode as a “market-wide de-risking or risk-off sentiment,” with traders shedding leveraged holdings amid macroeconomic fog. Contributing factors include subdued U.S. jobs figures, a more restrictive stance from the Federal Reserve, and lingering worries over a potential U.S. government shutdown. These elements have spilled over, dumping risk assets in both traditional finance and crypto arenas. Bond market fluctuations add to the unease, unsettling even conservative portfolios.
Yet, amid the distress, there are glimmers of opportunity. Lee posits that such flushes often recalibrate valuations, setting the stage for robust, enduring accumulation as liquidity returns and confidence rebuilds. The analysts concur that volatility will linger until the DeFi contagion is reined in and macroeconomic clarity emerges. Containing these intertwined threats will be pivotal for stabilization.
Overall, the crypto sell-off illustrates the sector’s sensitivity to both internal fragilities and global economic pulses. With liquidations clearing out excess speculation, the foundation for recovery could solidify, provided proactive measures address DeFi weaknesses and external pressures ease. Market participants remain vigilant, tracking these dynamics for the next phase.
