The crypto market suffered a heavy setback in November: volume saw a big dump, net outflow of Bitcoin ETF reached a record high, and expectations of interest rate hikes in Japan triggered a wave of dumping.

The crypto assets market experienced its most severe decline since February at the close of November. The volume on centralized exchanges (CEX) plummeted to $1.59 trillion, a month-on-month decrease of 26.7%, and Bitcoin ETF recorded a net outflow of $3.48 billion for the month — the worst performance since February.

The price of Bitcoin fell below $86,000 on Monday, plunging 6% during the Asian session, with a cumulative drop of 32% from the October peak, triggering over $600 million in liquidations. BTC ($188.5 million) and ETH ($139.6 million) bulls were the hardest hit, as market panic spread.

In the CEX sector, the leading exchanges saw their trading volume drop to $599.3 billion in November (a sharp decline of over $200 billion compared to October), but they still firmly hold the top position, with Gate and others closely following. Decentralized exchanges (DEX) also faced significant setbacks, with monthly trading volume falling to $397.7 billion (a 30% drop compared to the previous month), marking the lowest point since June. Both Uniswap and PancakeSwap have significantly shrunk compared to last month, with the DEX/CEX trading ratio decreasing to 15.73%, indicating that funds are increasingly flowing towards centralized platforms for risk aversion.

The biggest external factor driving this sell-off comes from Japan. The market is betting that the Bank of Japan will raise interest rates by 25 basis points in December, with a Polymarket probability of 52%, while the bond market expectation is even higher at 76%. The strengthening yen and soaring government bond yields to levels not seen since 2008 have forced a large number of yen arbitrage trades (borrowing yen to buy risk assets) to be passively liquidated. Arthur Hayes stated that the Bitcoin plunge is directly related to the “hawkish signals from the Bank of Japan.” Analysts pointed out that this is very similar to the situation in August 2024 when an unexpected rate hike from Japan caused Bitcoin to plummet by 20%.

The phenomenon of ETF capital outflow further exacerbates market weakness. The net outflow of the U.S. spot Bitcoin ETF in November reached $3.48 billion, completely offsetting the inflow from the previous month. BlackRock's IBIT had a net outflow of $2.34 billion in a single month, recording the largest daily outflow in history on November 18 (at $523 million). The Ethereum ETF also saw a net outflow of $1.42 billion in a single month. Meanwhile, the XRP ETF went against the trend, with a cumulative inflow of $666 million.

Corporate coin holdings have also become a new risk point. MicroStrategy Inc. stated that if its mNAV ratio falls below 1, it will be forced to sell Bitcoin to pay dividends. Currently, the company holds BTC worth $56 billion, and the mNAV has dropped to 1.19, meaning that further declines could trigger institutional-level sell-offs.

The trend in November shows that macro factors, the unwinding of arbitrage trades, and ETF capital outflows have created a triple pressure that has weighed down the market. The crypto market may continue to oscillate in a high volatility range in the short term, with liquidity risks continuing to rise.