Why did BTC fall below $100,000 despite the US government opening its doors?

Shaw, Jinse Finance

Starting late on November 13th, cryptocurrencies continued their downward trend. The market accelerated its decline in the early hours of the 14th, with Bitcoin briefly falling below $99,000, touching $98,000.4, its lowest point since early May; Ethereum briefly fell below $3,200, touching $3,154.22, a nearly 7% drop in 24 hours. Solana, Dogecoin, and XRP also saw significant declines. In the past 24 hours, $721 million in positions were liquidated across the network, with $582 million in long positions and $139 million in short positions liquidated.

The US government shutdown has ended, and recent cryptocurrency regulations and policies have been favorable, but why has the market rebound been weak, instead continuing to decline? What other factors are hindering the recovery of cryptocurrencies? Is it currently a deep correction or has it entered a bear market? Is there a chance for a rally before the end of the year?

I. Cryptocurrency Rebound Fails, Market Remains Weak The cryptocurrency market experienced another rapid decline this morning. Bitcoin briefly fell below $99,000, touching $98,000.4, its lowest point since early May, with a 24-hour drop of nearly 3%. Ethereum briefly fell below $3,200, touching $3,154.22, with a 24-hour drop exceeding 6.6%. Solana, Dogecoin, and XRP also saw significant declines. Solana fell 7.49%, Dogecoin fell 5.21%, and XRP fell 2.43%. According to Coinglass data, in the past 24 hours, a total of $721 million in positions were liquidated across the entire network, affecting over 193,000 individuals. Of these, $582 million were long positions liquidated, and $139 million were short positions liquidated, with long positions being the primary target. BTC liquidations totaled $261 million, ETH liquidations totaled $213 million, and SOL liquidations totaled $49.778 million. In addition, the three major U.S. stock indexes all fell sharply on Thursday, with the Nasdaq Composite Index, dominated by technology stocks, closing down 2.29%. Tech giants generally declined, with Tesla falling 6.64% and Nvidia dropping 3.58%. The fading optimism following the end of the U.S. government shutdown, the continued decline in expectations for a Federal Reserve interest rate cut, ETF fund flows, and whale selling are among the negative factors hindering the recovery of the cryptocurrency market. II. The U.S. Government Shutdown Ends, but Economic Recovery Will Take Time On November 13, U.S. President Trump signed a temporary funding bill, ending the longest government shutdown in U.S. history. The bill will provide continuous funding for the federal government, ensuring most government agencies have operating funds until January 30, 2026. However, the partisan struggle between the Republican and Democratic parties continues. The budget deadline at the end of January next year, the battle over universal healthcare subsidies, and even the fiscal battles before next year's midterm elections will all become the main battleground for the two parties' continued tug-of-war. This longest shutdown in history has had a significant negative impact on the economy and markets. Trump stated that the government shutdown has caused a $1.5 trillion loss, and it will take weeks or even months to fully calculate the total impact. White House economic advisor Hassett stated that due to the government shutdown, only employment data will be released for a month, not the unemployment rate. He predicts that the US fourth-quarter GDP growth rate will decrease by 1.5 percentage points due to the government shutdown. The Congressional Budget Office estimates that the six-week shutdown will reduce fourth-quarter GDP by 1.5 percentage points, ultimately resulting in a net loss of approximately $11 billion. A spokesperson for the International Monetary Fund (IMF) stated that the IMF has noticed signs of weakness in the US economy. Partly affected by the government shutdown, the US fourth-quarter GDP growth rate is expected to be lower than the IMF's previous forecast of 1.9%. The brief optimism following the end of the US government shutdown quickly dissipated, with market focus shifting to a large amount of delayed economic data, uncertainty surrounding the Fed's interest rate cut prospects, and concerns about overvalued tech stocks. This triggered a "risk-averse mode," leading to a widespread sell-off of overvalued tech stocks and risk assets. This deteriorating risk sentiment also spread to the crypto market, causing a continued decline in cryptocurrency assets. III. Growing Divergence Within the Fed Regarding Interest Rate Cuts, with Several Voting Members Taking a Hawkish Stance The Fed is increasingly divided on whether to continue cutting interest rates in December, with several Fed governors recently making numerous statements regarding the December rate decision. Fed Governor Milan reiterated on Wednesday that he expects inflation to decline and reiterated his call for lower interest rates. Milan believes that monetary policy must be adjusted—moving it away from its overly tight state—to mitigate some of the downside risks to the economy. Meanwhile, most regional Fed voting members are not enthusiastic about a December rate cut. Currently, four regional Federal Reserve presidents with voting rights (Collins of the Boston Fed, Musalaim of the St. Louis Fed, Goolsby of the Chicago Fed, and Schmid of the Kansas City Fed, who voted against the October rate cut) have not actively pushed for another rate cut in December. Fed Governor Hamak stated that interest rate policy should remain restrictive to exert downward pressure on the still worrying inflation level. Furthermore, Minneapolis Fed President Kashkari recently stated that he does not support the Fed's previous rate cut decision but remains cautious about the best course of action at the December meeting. Regarding the upcoming December rate decision, he said he could offer reasons for a rate cut based on data trends, or reasons for maintaining the current rate; we'll have to wait and see. According to CME's FedWatch tool, the probability of a 25 basis point rate cut by the Fed in December is 51.6%, while the probability of maintaining the current rate is 48.4%. The probability of the Federal Reserve cutting interest rates by a cumulative 25 basis points by January is 50.3%, the probability of keeping rates unchanged is 29.1%, and the probability of a cumulative 50 basis point cut is 20.6%. Furthermore, federal funds futures and overnight index swaps (OIS) contracts linked to the Fed's December 9-10 meeting show a slightly lower probability of a 25 basis point cut. The deepening divisions within the Fed, coupled with hawkish statements from several voting members, have led to a continuous decline in market expectations for a December rate cut. Investors are concerned about liquidity and whether they can smoothly enter risky assets such as cryptocurrencies. Fourth, ETF inflows have not yet recovered, and the market continues to be under pressure. CoinShares' latest weekly report indicates that digital asset investment products experienced outflows for the second consecutive week last week, totaling $1.17 billion. Market sentiment was pessimistic due to continued volatility in the crypto market and uncertainty surrounding a December US interest rate cut, but ETP trading volume remained high at $43 billion. Last week, Bitcoin saw a total outflow of $932 million; Ethereum also experienced significant outflows, totaling $438 million. Farside Investors data shows that the US spot Bitcoin ETF saw a net outflow of $610 million yesterday, and the spot Ethereum ETF saw a net outflow of $122 million. Ethereum ETFs have seen net outflows for three consecutive days this week, accumulating to $413 million. ETF fund flows are a key indicator of institutional investor sentiment in the crypto market, and sustained ETF inflows are a crucial driver of the 2025 bull market. The continued net outflows of ETF funds indicate that the crypto market has temporarily lost a major boost to its rebound. V. Profit-taking by long-term holders and increased downward pressure on the market due to whale selling. CryptoQuant data shows that Bitcoin long-term holders (LTH) are accelerating their selling of Bitcoin, with approximately 815,000 Bitcoins sold in the past 30 days, a new high since January 2024. As demand contracts, selling pressure is putting downward pressure on prices. Analyst Crazzyblock stated that long-term investors have been realizing some profits through selling in recent months. Additionally, OnchainLens detected that SharpLink-linked wallets transferred 4,363.5 ETH, worth approximately $14.47 million, to the OKX exchange, suggesting the start of a sell-off. Lookonchain monitoring also revealed that an anonymous hacker panicked and sold 2,243 Ethereum (approximately $8.05 million) at $3,589 during a market downturn. According to OnchainLens monitoring, a certain whale holding a 20x leveraged short position in Bitcoin currently has a floating profit of over $15 million. This whale has accumulated profits of over $41.7 million through multiple Bitcoin shorting operations. OnchainLens also monitored that the whale, which previously lent out 66,000 ETH and sold them, and then bought back 257,543 ETH during the market downturn, deposited 23,500 ETH (approximately $82.62 million) into Aave V3, then lent out 40 million USDC and transferred it to Binance, and subsequently purchased another 20,787 ETH (approximately $73.81 million) and deposited it into Aave V3 again. According to on-chain analyst Ai Yi, an address (0x7fe...17ac6) opened short positions in BTC, ETH, HYPE, and SOL, with a total open interest of $74.09 million and a floating profit of $1.805 million. The ETH short position has the largest floating profit, reaching $541,000. Profit-taking by long-term holders and selling by whales have put significant downward pressure on the market. Frequent trading by whales using leveraged contracts has made it difficult to effectively alleviate market volatility. VI. Analysis of Cryptocurrency and Other Asset Market Trends The anticipated recovery and upward trend in the crypto market has failed to materialize, instead continuing its downward correction. Other global asset markets have also failed to show exciting trends. Will the global market recover in the remainder of 2025? Is the crypto market currently undergoing a deep correction, or has it transitioned from a bull to a bear market? Let's examine some market interpretations. 1. Matrixport stated, “Cryptocurrency trading volume remains weak relative to market size. Over the past 12 months, total market capitalization has risen from $2.4 trillion to $3.7 trillion, while daily trading volume has fallen by 50%, from $352 billion to $178 billion. This divergence may indicate more limited market participation and weakening upward momentum, and if this continues, a cautious stance may be necessary. Based on recent on-chain metrics, Bitcoin may have entered a mini-bear market phase. While several potential catalysts exist, its ability to drive a sustained upward trend remains uncertain. Reported trading activity and fee revenue on listed exchanges remain subdued against a backdrop of low liquidity.” 2. Morgan Stanley strategist Denny Galindo stated that the crypto market has entered the “autumn phase” of Bitcoin’s four-year cycle and advised investors to take profits before a potential “winter” arrives. He stated that historical data shows Bitcoin's price cycle exhibits a stable "three rises and one fall" rhythm. Galindo advised investors to lock in profits in advance to prepare for a potential crypto winter.

3. Windemute stated, "Bitcoin still correlates with the stock market, but only during market downturns. The correlation coefficient remains high at around 0.8, but Bitcoin reacts more strongly to Nasdaq declines than rallies. This negative performance shift has reached levels not seen since the end of 2022, while current prices are hovering near all-time highs."

4. JPMorgan analysts stated, "The downside for Bitcoin from current levels is 'very limited,' with support around $94,000. Meanwhile, analysts reiterated their prediction from last week, based on a volatility-adjusted comparison between Bitcoin and gold, that Bitcoin's price would rise by approximately $170,000 over the next 6-12 months."

4. JPMorgan analysts stated, "Bitcoin's downside from current levels is 'very limited,' with support around $94,000."

5. Strategy founder Michael Saylor stated that Bitcoin's market capitalization will surpass that of gold by 2035, firmly predicting, "I have no doubt that by 2035, Bitcoin will become an asset class larger than gold." 6. Crypto analyst @ali_charts wrote that if this Bitcoin cycle resembles the trends of 2015–2018 or 2018–2022, then the top appeared on October 26th, and a macroeconomic downtrend may have already begun. 7. CryptoQuant analyst Darkfost stated that the market's deleveraging process continues, excess risks are being cleared, and leverage use is gradually cooling down. Open interest has fallen 21% over the past three months (90-day change), with leveraged positions declining sharply. In bull markets, a decline in leveraged positions often precedes a trend reversal, helping to cleanse the market and rebuild it on a healthier foundation. Alliance DAO co-founder QwQiao stated that while macroeconomic factors such as the Federal Reserve's quantitative easing (QE), the rebuilding of the US Treasury's general account (TGA), and interest rate cuts point to a market rally, intuitively, it's all over. He emphasized the inevitability of the four-year cycle prediction, leaving the market at a frustrating crossroads. He observed that most savvy traders and long-term investors have turned bearish. QwQiao sees artificial intelligence (AI) as the sole driver of the cycle, far exceeding liquidity indicators and technical signals. He warned that if the AI ​​bubble bursts, the entire market will collapse; conversely, if AI-related stocks continue to rise, the bears will be completely wrong. He likened NVIDIA (NVDA) to Bitcoin in the crypto world, pointing out that when AI stocks (especially NVIDIA) rise, funds flow out of other assets such as crypto, causing crypto to fall, and vice versa, creating a binary situation of AI stocks vs. everything.

9. Anderson Economic Group LLC's brief analysis points out that the economic impact of this longest US government shutdown in history will significantly exceed that of the 2018-2019 shutdown. Its full impact has not yet been fully realized.