The US government opened its doors, but BTC instead fell below 100,000 dollars. What happened?

Shaw, Golden Finance

Starting late at night on November 13, the cryptocurrency market continued to decline. In the early morning of the 14th, the market accelerated its downturn, with Bitcoin briefly dropping below $99,000, hitting a low of $98,000.4, the lowest point since early May; Ethereum briefly fell below $3,200, reaching $3,154.22, with a nearly 7% drop in 24 hours. Solana, Dogecoin, XRP, and others also saw significant declines. In the past 24 hours, the total liquidation across the network reached $721 million, with long positions liquidated at $582 million and short positions at $139 million.

The U.S. government “shutdown” has been declared over, and recently there have been favorable developments in cryptocurrency regulation and policies, but why has the market rebound been consistently weak and instead continued to decline? What other factors are hindering the recovery of cryptocurrencies? Are we currently in a deep adjustment or has a bear market already begun? Can we expect another wave of upward trends before the end of the year?

1. Cryptocurrency rebound lacks strength, market remains weak

The cryptocurrency market saw a rapid decline again this morning, with Bitcoin briefly falling below $99,000, reaching as low as $98,000.4, dropping to its lowest point since early May, with a 24-hour decline of nearly 3%. Ethereum briefly fell below $3,200, reaching as low as $3,154.22 with a 24-hour decline of over 6.6%. Solana, Dogecoin, XRP, and others have also experienced significant drops. Solana fell by 7.49%, Dogecoin fell by 5.21%, and XRP fell by 2.43%.

Coinglass data shows that $721 million in liquidations occurred across the network in the past 24 hours, affecting over 193,000 people, with long positions liquidated at $582 million and short positions liquidated at $139 million, mainly affecting long positions. BTC liquidations totaled $261 million, ETH liquidations totaled $213 million, and SOL liquidations totaled $49.778 million.

In addition, on Thursday, the three major U.S. stock indexes collectively fell during the day's trading, with the technology-focused Nasdaq Composite Index closing down 2.29%. Tech giants generally declined, with Tesla down 6.64% and Nvidia falling 3.58%.

The negative factors such as the fading of optimism after the U.S. government “shutdown” ends, the continued decline in expectations for Federal Reserve interest rate cuts, ETF fund flows, and whale sell-offs have hindered the recovery of the cryptocurrency market.

2. The U.S. government has ended the “shutdown,” but economic recovery will take time.

On November 13, President Trump signed a temporary funding bill, ending the longest government shutdown in U.S. history. The bill will provide ongoing funding for the federal government, allowing most government agencies to operate until January 30, 2026. However, the partisan struggles between the Republican and Democratic parties continue. The budget deadline at the end of January next year, the negotiations over universal healthcare subsidies, and the fiscal battles leading up to next year's midterm elections will all become the main battleground for the ongoing tug-of-war between the two parties.

The negative impact of this historically longest “shutdown” on the economy and the market is significant. Trump stated that the government shutdown has resulted in a loss of $1.5 trillion, and accurately calculating the overall impact of the losses will take weeks or even months. White House economic advisor Hassett mentioned that due to the government “shutdown”, only employment data will be released within a month, while unemployment rate data will not be published. He expects that the growth rate of the U.S. Gross Domestic Product (GDP) in the fourth quarter will decrease by 1.5 percentage points due to the government “shutdown”. The U.S. Congressional Budget Office estimates that a six-week shutdown will reduce the GDP in the fourth quarter by 1.5 percentage points, ultimately resulting in a net loss of about $11 billion. An International Monetary Fund (IMF) spokesperson stated that the IMF has detected signs of weakness in the U.S. economy. Due to some effects of the government “shutdown”, it is expected that the growth rate of the U.S. GDP in the fourth quarter will be lower than the previously predicted 1.9% by the IMF.

The brief optimism brought by the end of the U.S. government shutdown quickly dissipated, as market focus shifted to a large amount of delayed economic data, the uncertainty surrounding the Federal Reserve's interest rate cuts, and concerns over overvalued tech stocks, leading to a “risk-off mode” with widespread selling of overvalued tech stocks and risk assets. The deterioration of risk sentiment also spread to the cryptocurrency market, triggering a sustained decline in cryptocurrency assets.

III. The internal divisions over interest rate cuts at the Federal Reserve are widening, with several voting members “going hawkish”.

The internal division within the Federal Reserve regarding whether to continue cutting interest rates in December is widening, as several Federal Reserve governors have recently made intense statements about the December interest rate decision. Federal Reserve Governor Mieran reiterated on Wednesday that he expects inflation to decline and called for a rate cut again. Mieran believes that monetary policy must be adjusted appropriately—to get it out of an overly tight state in order to eliminate some economic downside risks. However, most regional Federal Reserve voting members are not actively supporting a rate cut in December. Currently, four regional Federal Reserve presidents with voting rights (Boston Fed's Collins, St. Louis Fed's Musalem, Chicago Fed's Goolsbee, and Kansas Fed's Schmidt, who voted against the rate cut decision in October) have not actively pushed for another rate cut in December. Federal Reserve Governor Hamak stated that interest rate policy should remain restrictive in order to exert downward pressure on the still concerning inflation levels. In addition, the latest statement from Minneapolis Fed President Kashkari indicated that he does not support the Federal Reserve's last rate cut decision, but he remains cautious about the best course of action for the December meeting. Regarding the upcoming December interest rate decision, he mentioned that reasons for a rate cut could be proposed based on data trends, as well as reasons for maintaining the current rate, and we will have to wait and see.

According to CME's “FedWatch” data, the probability of the Federal Reserve cutting interest rates by 25 basis points in December is 51.6%, while the probability of maintaining the current rate is 48.4%. The probability of the Federal Reserve cumulatively cutting rates by 25 basis points by January of next year is 50.3%, with the probability of keeping the rate unchanged at 29.1%, and the probability of a cumulative cut of 50 basis points at 20.6%. Additionally, the federal funds futures and overnight index swap contracts linked to the Federal Reserve's meeting on December 9-10 show that the probability of a 25 basis point cut is slightly below 50%.

The deepening divisions within the Federal Reserve, along with multiple committee members intensively stating a “hawkish” stance, have led to a continuous decline in market expectations for a rate cut by the Federal Reserve in December. Investors are concerned about whether liquidity is sufficient and whether they can smoothly enter risk assets such as cryptocurrencies.

4. ETF fund 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, totaling $1.17 billion. The market sentiment remains pessimistic due to continuous volatility in the crypto market and uncertainty surrounding the prospect of a rate cut in December in the U.S., yet ETP trading volume remains high at $43 billion. Last week, Bitcoin saw total outflows of $932 million, while Ethereum also experienced significant outflows totaling $438 million.

Farside Investors data shows that the U.S. spot Bitcoin ETF had a net outflow of $610 million yesterday, while the spot Ethereum ETF saw a net outflow of $122 million yesterday. This week, the Ethereum ETF has experienced net outflows for three consecutive days, totaling $413 million.

ETF fund flows are a significant barometer of institutional investors in the crypto market, and the continuous inflow of ETF funds is a crucial driving factor for the bull market in 2025. A sustained net outflow of ETF funds indicates that the crypto market has temporarily lost a major impetus for a rebound.

V. Long-term holders take profits, and whale sell-offs increase downward pressure on the market.

CryptoQuant data shows that long-term holders (LTH) of Bitcoin are accelerating their sales of Bitcoin, with approximately 815,000 Bitcoins sold in the past 30 days, a new high since January 2024. As demand shrinks, selling pressure is exerting downward pressure on prices. Analyst Crazzyblock noted that long-term investors have been cashing out some profits through sales in recent months. Additionally, OnchainLens monitored that a SharpLink associated wallet transferred 4,363.5 ETH to the OKX exchange, worth about $14.47 million, suspected of initiating a sell-off. Lookonchain monitoring revealed that an anonymous hacker panic sold during the market downturn—selling 2,243 Ethereum at a price of $3,589 (approximately $8.05 million).

OnchainLens monitoring shows that a certain whale's 20x short position in Bitcoin currently has an unrealized profit of over $15 million. This whale has made a cumulative profit of over $41.7 million through multiple Bitcoin shorting operations. Onchain Lens also detected that this whale previously borrowed 66,000 ETH and sold them, and during the market downturn, repurchased 257,543 ETH, depositing 23,500 ETH (approximately $8.262 million) into Aave V3, then borrowed $40 million USDC and transferred it to Binance, subsequently purchasing another 20,787 ETH (approximately $7.381 million) and depositing it back into Aave V3. On-chain analyst Ai Yi monitored that a certain address (0x7fe…17ac6) opened short positions in BTC, ETH, HYPE, and SOL, currently holding a total position of $7.409 million, with an unrealized profit of $1.805 million, among which the ETH short position has the highest unrealized profit, reaching $541,000.

Long-term holders taking profits and the selling by whales have put significant downward pressure on the market. Frequent leveraged contract trading by whales makes it difficult to effectively ease market volatility.

6. Interpretation of Cryptocurrency and Other Asset Market Trends

The anticipated recovery rally in the cryptocurrency market has been delayed, and instead, it continues to decline and adjust. Other global asset markets have also not shown any exciting trends. Can the global market still recover in the remaining time of 2025? The cryptocurrency market is currently undergoing deep consolidation and adjustment; is it transitioning from a bull market to a bear market? Let’s take a look at what interpretations the market has.

1 Matrixport stated “Relative to the market size, cryptocurrency trading volume remains weak. Over the past 12 months, the total market capitalization rose from $2.4 trillion to $3.7 trillion, while daily trading volume fell from $352 billion to $178 billion, a decline of 50%. This divergence may indicate a more limited market participation and weakened upward momentum. If this situation persists, a cautious stance may be required. According to recent on-chain indicators, Bitcoin may have entered a small bear market phase. Although there are multiple potential catalysts, their ability to drive a sustained upward trend remains uncertain. In the context of lower liquidity, reported trading activity and fee income in the market remain sluggish.”

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 indicated that historical data shows Bitcoin's price cycles exhibit a stable “three up, one down” rhythm. Galindo recommended that investors lock in gains in advance to prepare for the possible crypto winter ahead.

Wintermute stated, “Bitcoin is still correlated with the stock market, but this correlation only manifests during market downturns. The correlation coefficient remains high at around 0.8, but Bitcoin's response to declines in the Nasdaq index is stronger than its response to increases. This negative performance shift has reached levels not seen since the end of 2022, while the current price hovers near historical highs.”

4 JPMorgan analyst team stated that the downside potential for Bitcoin from the current price level is “very limited,” with a support price of around $94,000. Meanwhile, the analysts reiterated last week's forecast of a price increase for Bitcoin of approximately $170,000 over the next 6-12 months, based on the comparison adjusted for the volatility between Bitcoin and gold.

Michael Saylor, the founder of 5 Strategy, stated that the market value of Bitcoin will surpass that of gold by 2035, and firmly predicted: “I have no doubt that by 2035, Bitcoin will become a larger asset class than gold.”

Crypto analyst @ali_charts stated that if this Bitcoin cycle is similar to the trends of 2015–2018 or 2018–2022, then the top may occur on October 26, and the macro downtrend may have already begun.

CryptoQuant analyst Darkfost stated that the market's deleveraging process is still ongoing, and excess risks are being continuously eliminated, with leverage usage gradually cooling down. Over the past three months (90-day change), the open interest has decreased by 21%, and leveraged positions are significantly declining. During a bull market phase, a decrease in leveraged positions often precedes a trend reversal, helping to clear the market and rebuild on a healthier foundation.

8 Alliance DAO co-founder QwQiao stated that despite macro factors such as Federal Reserve quantitative easing (QE), the rebuilding of the Treasury General Account (TGA), and interest rate cuts indicating a market rise, intuitively, everything feels like it's over. He emphasized the inevitability of the four-year cycle prophecy, which puts the market at a frustrating crossroads. He observed that most smart traders and long-term investors have turned bearish. QwQiao views artificial intelligence (AI) as the only dominant factor in the cycle, far exceeding liquidity indicators and technical signals. He warned that if the AI bubble bursts, the entire market will crash; conversely, if AI-related stocks continue to rise, the bears will be completely wrong. He likened NVIDIA (NVDA) to Bitcoin in crypto, pointing out that when AI stocks (especially NVIDIA) rise, funds flow out of other assets like crypto, causing crypto to drop, and vice versa, creating a binary pattern of AI stocks vs everything.

9 Anderson Economic Group LLC Brief Analysis points out that the longest government shutdown in U.S. history will have a significantly greater impact on the economy than the shutdown from 2018 to 2019. Its full effects have yet to be fully realized.