In mid-November 2025, Bitcoin’s price fell below $95,000, marking a significant retreat from its October peak of over $126,000. This decline was driven by a combination of a historic liquidity crunch, shifting institutional behavior, and changing political winds that together pressured market structure and investor sentiment.
A Perfect Storm of Selling Pressure
The drop was not caused by a single factor, but by several converging elements that amplified the downside.
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Historic Liquidity Drain: The record-breaking US government shutdown created an unprecedented liquidity crisis . With the government unable to spend, the US Treasury General Account (TGA) ballooned, sucking nearly $1 trillion out of the financial system. This act was equivalent to a severe monetary tightening measure, removing crucial liquidity from risk assets like Bitcoin.
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Institutional Retreat: A key pillar of the previous bull run showed signs of weakness. Flows into US spot Bitcoin ETFs, which had been a major source of institutional demand, weakened and even turned negative . This indicated that institutional capital was becoming more cautious.
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Leverage Unwind: The market underwent a massive and painful deleveraging. Following the “10.11” flash crash, the derivatives market saw one of the largest liquidations in history, with over $190 billion in futures open interest wiped out. This forced selling created a vicious cycle that drove prices lower.
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Political and Macroeconomic Uncertainty: Surprising Democratic victories in key state elections were seen as a negative signal for the crypto-friendly policies of the Trump administration, causing some investors to reassess their positions. Furthermore, market expectations for a December Federal Reserve rate cut fell sharply, strengthening the dollar and adding to the risk-off environment.
Assessing the Market’s New Landscape
The sharp decline has shifted the market’s foundation. Technical support levels were broken, and the price fell below key on-chain cost basis models, leaving a significant portion of recent buyers underwater and exposing market fragility . Data also shows that long-term holders, who had been profit-taking since July, accelerated their distribution of assets, further adding to the selling pressure.
Market sentiment reflected this stress, with indicators like the Fear & Greed Index plunging into “Extreme Fear” territory. The scale of the move has led some analysts to question whether Bitcoin’s traditional four-year cycle, historically driven by its halving event, is being overshadowed by the broader global liquidity cycle.
Divergent Paths Forward
The future trajectory of Bitcoin is now a subject of intense debate among experts, with two primary scenarios emerging.
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The Bear Case for a Deeper Correction: Some analysts foresee a prolonged downturn. The combination of weakened ETF inflows, persistent selling from long-term holders, and a breakdown in market structure suggests the potential for a deeper correction. Some technical analyses point toward a possible floor between $70,000 and $80,000 as the market works to find a new equilibrium.
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The Bull Case for a Liquidity Rebound: Conversely, a more optimistic view hinges on a resurgence of liquidity. The end of the US government shutdown is expected to trigger a powerful reversal. As the Treasury is authorized to resume spending, the massive cash balance in the TGA will be injected back into the economy, acting as a form of “stealth quantitative easing”. This flood of liquidity could become the primary catalyst for a strong rebound in Bitcoin and other risk-sensitive assets.
The market’s direction will likely be determined by the balance between these forces—specifically, whether the return of liquidity from the US Treasury can overpower the current headwinds of institutional caution and shaken investor confidence.
