Market sentiment is deteriorating rapidly! Bitcoin has fallen below the $90,000 mark for the first time in 7 months, with panic spreading as global stock markets decline.

Investors are pulling out of risky assets ahead of NVIDIA Corporation's financial report and key US employment data. On Tuesday, Bitcoin fell below $90,000, erasing all the gains it had made in 2025 over the past month, and shaking confidence in the entire cryptocurrency sector. At the same time, the pessimism triggered by the sharp drop in Bitcoin is spreading to various asset classes, with Asian stock markets and US and European stock index futures all weakening. As of the time of writing, Bitcoin is trading at $89,900. The last time Bitcoin fell below the $90,000 mark was back when US President Trump imposed tariffs on trading partners, disturbing the global financial markets. At that time, Bitcoin briefly dropped to a low of $74,400 in April. The drop in Bitcoin below $90,000 has exacerbated a widespread sell-off in the market, with investors selling stocks and turning to government bonds for safety. Data shows that a global stock index is nearing a one-month low. The MSCI Asia-Pacific index plummeted over 2%, marking its worst performance in a month. Almost all Asian stock markets saw declines. US stock index futures also fell - Dow futures dropped by 0.43%, S&P 500 futures dropped by 0.65%, and Nasdaq 100 futures dropped by 0.84%. European stock market futures also declined. Amidst the drop in cryptocurrency, investors were already worried about the prospect of a rate cut in the US. Bitcoin falling below $90,000 has turned the general sell-off in Asian stock markets in the early session into a complete rout. Vantage Markets analyst Hebe Chen said, "The continued sell-off in Bitcoin has undoubtedly amplified the market's risk warning signals, reinforcing a sense that deep changes may be happening beneath the surface." Some market observers suggest that the cryptocurrency sell-off could trigger forced liquidation among retail investors, who may need to sell other assets to meet margin requirements. This could create a feedback loop from selling cryptocurrency to other markets, as further price declines could trigger margin calls in more asset classes. Even without the leverage amplification, cross-market selling may still become self-reinforcing. As investors move away from concerns about the global trade war and start betting on technological innovation to drive cross-market rallies, cryptocurrency and stock markets have been thriving in sync this year. But now these hopes seem to be fading. Van Eck's cross-asset investment strategist Anna Wu pointed out, "Momentum is a self-nourishing machine. Led by traders selling off their positions ahead of NVIDIA Corporation's earnings and macroeconomic data, the deterioration in the US market sentiment has spread to Asian markets. If Bitcoin is used as a market sentiment indicator, it is pointing to bear market-level fear." Thomas Bureau, co-head of global FX options trading at the French Industrial Bank, said, "Stock indices have been fluctuating downward, and Bitcoin, often seen as a high-risk beta proxy asset, is almost mirroring these movements. This correlation is adding to market sentiment pressure, as the weakness in cryptocurrency is reinforcing expectations of tightening liquidity and risk aversion." Homin Lee, senior macro strategy at Longo Bank, stated, "The volatility in the cryptocurrency market is spreading to other risk assets, and the ongoing reassessment of the probability of a Fed rate cut in December is also adding to the unease. This tension will continue until the September employment report gives a clearer direction. Weak job data or strong performance from NVIDIA Corporation could help alleviate the current situation." Bitcoin falling below a key level triggers losses for ETF investors Bitcoin briefly fell below a key level on Tuesday, resulting in losses for investors who had entered the cryptocurrency market via exchange-traded funds (ETFs). Sean Rose, an analyst at the blockchain data platform Glassnode, pointed out that the average cost basis for all Bitcoin ETF inflows is around $89,600 - reflecting the weighted average price of all inflows into Bitcoin ETFs since their inception, and Bitcoin briefly fell below this level on Tuesday. This milestone event highlights how quickly sentiment has turned negative in the cryptocurrency market. Bitcoin has fallen over 30% from its peak since early October, as risk-averse traders and long-term holders have been cashing out. Bitcoin falling below the cost line is a test of determination for both retail and institutional investors, many of whom have been riding the upward momentum of cryptocurrencies in the past year based on expectations of future returns. Data shows that billions of dollars have flowed into Bitcoin ETFs this year, with these products being so popular that issuers are no longer limited to funds focusing on major tokens like Bitcoin and Ethereum. Currently, there are over 110 cryptocurrency-related ETFs trading in the US market. Despite the cryptocurrency market being known for its extreme volatility, this recent downturn has caught Wall Street off guard - especially considering the influx of institutional funds into the industry following Trump's election victory. ETFs have been hailed as a safer, regulated entry point for further involvement in digital assets, but the recent downturn serves as a reminder that the notorious volatility of cryptocurrencies has not disappeared with Wall Street's entry. Cryptocurrency bear market at hand? Multiple negative factors may prolong the downturn An analyst at 10X Research, noted that the cryptocurrency market has entered a "confirmed bear market stage," with a weakening trend in ETF inflows, continuous selling by long-term holders, and reluctance of retail investors to enter the market, all indicating that sentiment is silently deteriorating. Data shows that Bitcoin ETFs saw a net outflow of $311.3 million last week for four days, marking the fifth consecutive week of outflows, the longest since March 14. The total outflow over the past five weeks amounts to $2.6 billion, second only to the $3.3 billion outflow that ended on March 28. Meanwhile, traders are preparing for further declines in Bitcoin, with demand for downside protection - particularly against the $90,000, $85,000, and $80,000 levels - increasing significantly. Data from Deribit, a derivatives platform owned by Coinbase, shows that activity in protective options trading expiring later this month is particularly active. Traders who were basking in the glory of Bitcoin reaching historic highs just a few weeks ago are now betting $740 million on Bitcoin declining by the end of November, with the size of bearish contracts far exceeding bullish positions. Macroeconomic factors are also weighing on cryptocurrency market sentiment. Traders are closely watching NVIDIA Corporation's (NVDA.US) earnings report released on Wednesday, as the company is a bellwether for the technology industry and speculative risk, while also keeping an eye on expectations for a rate cut by the Fed in December. Adam McCarthy, a research analyst at Kaiko, said, "I believe that discussions on Fed policy and the AI bubble are the two major obstacles facing cryptocurrencies and various risky assets before the end of the year." "Risks in the AI sector may be intensifying and affecting cryptocurrency market sentiment, combined with the comments of FOMC officials, Bitcoin may face a continued downward trend." Investors on edge! More volatility may be seen in US stocks The recent movements of Bitcoin and global stock markets highlight the continued uncertainty around interest rates and tech stock earnings. NVIDIA Corporation's earnings report set to be released on Wednesday will test investor tolerance for high valuations in the AI sector, with market attention then turning to the delayed September employment report set to be released on Thursday, which will provide clues for the Fed's policy outlook. Analysts studying US stock technical charts have sounded the alarm, concerned that the current downtrend may expand into at least a 10% overall pullback. On Monday, the S&P 500 index plunged significantly, marking a 3.2% decline from its record high set on October 28, the first time in 139 trading days that the benchmark index closed below the 50-day moving average. John Roque, head of technical analysis at 22V Research, noted several "ominous" signals flashing on the Nasdaq Composite Index as well. The number of stocks hitting 52-week lows among the 3,300-plus components of the index now exceeds the number hitting 52-week highs, indicating a weak internal market structure and a lower likelihood of further rebound. Nick Twidale, Chief Market Analyst at AT Global Markets, said, "Investors have had a good year overall, but as the end of the year approaches, market tension is clearly rising. With the Christmas trading season approaching, there may be more volatility in the coming weeks." However, Garfield Reynolds, an analyst, said, "Excessive concerns about the AI boom, coupled with the apparent shock of investors to the Fed possibly delaying a rate cut by about a month, have exhausted risk appetite. However, considering the resilience of the US economy and the central bank's desire to ease policy when signs appear to be the opposite, US and global stock markets are expected to rebound from the current slump."