Bloomberg: Wall Street faces stress test as Bitcoin falls.

According to Bloomberg, the cryptocurrency market has experienced a rapid and larger-than-expected sell-off in recent weeks. Friday's drop pushed Bitcoin's price close to $80,500, marking its worst monthly performance since the $100 million collapse of Terra in 2022, which triggered bankruptcies such as FTX.

Bitcoin's total market capitalization has evaporated by approximately $500 billion, and other altcoin markets have also suffered heavy losses.

Although Bitcoin's price is still higher than when Trump won the presidential election, its gains in Trump's first year in office have largely subsided.

This month, investors have withdrawn billions of dollars from 12 Bitcoin-related ETFs.

Digital asset reserves (DATs), inspired by Michael Saylor's Strategy Inc., are also facing steeper outflows of funds.

Fadi Aboualfa, head of research at Copper Technologies Ltd., said that institutional investors do not have a "hodling" mentality and they rebalance their portfolios when the market falls.

This plunge lacked the previous systemic stress and significant scandals.

Cantor Fitzgerald & Co. analysts Brett Knoblauch and Gareth Gacetta believe that most of the decline was attributed to the flash crash on October 10, an event that likely had a greater impact on the balance sheets of many large players than initially anticipated, forcing them to sell.

The flash crash on October 10 liquidated $19 billion in cryptocurrency bets within hours, exposing problems with insufficient liquidity over the weekend and excessive leverage on some exchanges.

Liquidity in the crypto market remains low, with market makers weakened by the crash struggling to enter and support prices. According to Coinglass data, approximately $1.6 billion in bets were liquidated on Friday.

The crypto market is acting as a proxy for rapid risk appetite and is interacting with the volatile trading of tech stocks.

Adam Morgan McCarthy, senior research analyst at blockchain data company Kaiko, points out that medical device companies or cancer research companies renaming themselves "cryptocurrency reserve companies" is a signal of a market cycle.

According to data from CoinMarketCap, the Fear and Greed index, which measures sentiment in the crypto market, fell to 11 points (out of 100) on Friday, placing it in the "extreme fear" zone.