The crypto market has seen $1 trillion in value erased in this month's plunge into bear territory

• Bitcoin cratered on Thursday, leading risk assets lower after a big U-turn in the stock market.
• The crypto meltdown has wiped out over $1 trillion in market value since early October.
• Macro and technical factors are weighing on digital assets, pushing bitcoin deeper into bear territory.

Bitcoin cratered on Thursday, falling sharply alongside other risk assets after the stock market saw a huge reversal following an earlier rally.

The latest downward moves in crypto have now erased more than $1 trillion in market value since early October, when the crypto market cap was about $4.2 trillion. On Thursday, that figure was under $3 trillion.

On October 10, a massive liquidation event unexpectedly sent crypto markets into free fall. It marked the largest bitcoin liquidation in history, as investors offloaded $19 billion in leveraged positions; however, some estimates suggest the true number is closer to $30 billion.

Over a month later, conditions haven't improved, and bitcoin's slide has pulled other coins down with it. Bitcoin was trading at $86,398 on Thursday, down 31% from its October 6 high above $126,000. The token is now in the red for the year, down more than 5% to date.

The ongoing crypto bear market seems to be testing even the most steadfast bitcoin bulls, who fear a deeper market freeze may be setting in until a new catalyst can bring fresh upside.

"Wealthy Bitcoin investors are selling and ETFs are seeing outflows," read a report from crypto asset manager 21Shares. "Long-term investors have offloaded ~42K BTC (~$4B) this month, while spot Bitcoin ETFs posted three consecutive weeks of outflows. Thursday alone saw $866M in redemptions, the second-largest day on record."

The firm's strategists cited a combination of technical factors and macro pressures that continue to push bitcoin and other cryptocurrencies lower. Prices remain volatile due to forced liquidations and thin market liquidity, while commentary on lower odds of a rate cut from the Fed next month is denting the bull case for risk assets like bitcoin.

Satraj Bambra, CEO of the hybrid crypto exchange Rails, noted that the casualties from the October meltdown are still piling up, especially since market conditions remain delicate.

"We are probably close to a local bottom," he stated. "The market should see a reflexive bounce as positioning resets. But if that bounce fails to sustain and if buyers don't step in decisively we are likely heading lower. This is still a fragile market, and the burden of proof is on the bulls."