Bitcoin plummets to a new low, analysts say the U.S. market dominates the sell-off.

Written by: Chloe, ChainCatcher

Bitcoin failed to maintain the key psychological support level of $100,000, briefly dropping below $97,000, reaching its lowest point since May of this year, and currently recovering to $97,612 before the deadline. Ethereum plummeted by 8% to $3,167, marking its lowest point since July. This wave of cryptocurrency decline is not an isolated event, but rather the result of multiple structural pressures in the U.S. market erupting simultaneously.

The Coinbase premium index continues to show deep negative values, with the U.S. market dominating the sell-off.

According to on-chain data from XWIN Research, retail investors in the United States are the main driving force behind the current decline. The Coinbase premium index has shown a deep negative value for several consecutive weeks, with Bitcoin trading at a lower price on Coinbase compared to other global exchanges, indicating that the selling pressure in the US investment market is far greater than the buying interest in Asia or Europe. This also aligns with the recurring pattern in the market: Bitcoin rises during the daytime in Asia but experiences a sharp reversal during the evening trading hours in the US.

Moreover, long-term holders from various age groups are simultaneously selling Bitcoin. Analysts, including Will Clemente, co-founder of Reflexivity Research, have shown that the selling pressure is not concentrated in a specific group but is widely distributed among holders of 6 months, 18 months, 3 years, and even 7 years. This phenomenon is extremely rare, and Fidelity has also confirmed that many long-term holders in the United States are taking profits before the end of the year to complete their investment allocation adjustments for the year.

The government shutdown has caused data loss, and the probability of the Federal Reserve cutting interest rates may decline.

From a macro policy perspective, although the two-month government shutdown has officially ended, the market is concerned that the lack of key data due to the shutdown may strengthen the U.S. government's rationale for keeping interest rates unchanged.

White House press secretary Karoline Leavitt revealed on Wednesday that some of the October economic reports may not be published. National Economic Council representative Kevin Hassett also confirmed to Fox News that the government will not release the unemployment data for October because “there was no household survey in October, so we will only get half of the employment report.” According to the CME FedWatch, traders are currently pricing in a 51% chance of a Federal Reserve rate cut in December, down from 69% a week ago.

In addition, during the U.S. government shutdown, market liquidity was severely impacted. As the federal government halted spending, a rare fiscal surplus emerged, equivalent to pulling billions of dollars from the market. Under the dual pressure of tightening market liquidity and long-term holders taking profits, traders significantly cooled their expectations for a Fed rate cut in December. According to the CME FedWatch, the current pricing probability for a rate cut is 51%, down from 69% a week ago.

The recent decline is mainly attributed to three factors: market concerns about the Federal Reserve's next move, tightening market liquidity, and long-term holders taking profits.

Additionally, on Thursday, the Nasdaq index for technology stocks fell sharply by 2.3%, with cryptocurrency-related stocks dropping by 10-20%. Palantir CEO Alex Karp expressed concerns about the profitability of AI during an interview at Yahoo Finance's Invest event, stating that not every AI application can “create enough value to justify the actual cost.” This further worried market investors that the U.S. economy may be entering a soft phase, with Palantir(PLTR), Intel(INTC), and CoreWave(CRWV) all experiencing single-day declines of 6% or more in their stock prices.

Finally, Cointelegraph points out that this wave of selling pressure does not indicate that Bitcoin whales are cashing out. Crypto analyst PlanB also believes that the current long-term selling pressure mainly comes from holders who entered the market between 2017 and 2022. Market data shows that traders are not particularly bearish on Bitcoin itself, and there are no specific major events triggering panic; this decline more reflects the uncertainty of the overall economic environment.