Bitcoin ( BTC ) fell below $95,000 for the first time in six months, falling to a low of $93,951 before rebounding to reclaim $95,000 and moving to $95,940. Risk aversion swept through markets on Friday as investors pulled nearly $900 million from funds investing in the flagship cryptocurrency. Bitcoin is on the verge of wiping out all its gains for the year. Why Is Bitcoin (BTC) Crashing? Bitcoin ( BTC ) is in the doldrums, having crashed below $95,000 on Friday before posting a marginal recovery. Investors initially blamed the Federal Reserve’s hawkish stance as inflation fears returned. However, Citi analysts believe the decline is likely linked with falling liquidity in the US financial system rather than interest rate expectations. The analysts highlighted two key factors: bank reserves held at the Federal Reserve and the US Treasury’s General Account (TGA), which acts as the US government’s main account. The TGA and bank reserves generally move in opposite directions. This year, the TGA has swelled while bank reserves have dropped. Lead analyst Dirk Willer stated, “Traditionally, falling reserves have also impacted equities negatively, but this did not happen before this week. But it is plausible that Bitcoin is a more sensitive instrument for pure liquidity, especially with equities caught up in the fundamentally driven AI narrative.” Additionally, the Federal Reserve’s quantitative tightening has also pulled money out of the financial system. Bitcoin Whales Still Selling Bitcoin’s market capitalization dropped back below $2 trillion, pushing the broader market down as well. Reports have also flagged a 2,400 BTC transfer worth $237 million to Kraken from a wallet associated with Owen Gunden. Such large selloffs often create short-term supply, although analysts cautioned against reading such actions as capitulation. On-chain analysts have reported a steady increase in selling from long-term holders. According to Glassnode data, average daily spending has climbed from 12,000 BTC in early July to around 26,000 BTC this week. Analysts have stated that this is consistent with late-cycle profit-taking rather than a mass exodus. Bitcoin (BTC) Price Analysis Bitcoin ( BTC ) sank below $95,000 on Friday alongside a market rout driven by a slide in tech stocks and uncertainty around further rate cuts. The decline came as market data revealed spot Bitcoin ETFs registered their second-highest outflows. Bitcoin and the market in general have struggled to recover from October’s selloff, triggered by leveraged liquidations and selling from OG Bitcoin holders. Analysts from 10x Research stated, “There is currently no meaningful marginal buyer stepping in. This aligns perfectly with multiple on-chain indicators we’ve been tracking, which confirm that Bitcoin is in a bear market regime.” 10x research warned that if prices dip below $93,000, further downside to $90,000 could become a possibility. The analysts stated that a rally in the near-term is unlikely without a rate cut in December and a more dovish stance by the Federal Reserve. “We believe there is now a high likelihood the Fed will remain on hold. If that happens, it effectively removes the probability of a classic Bitcoin Christmas rally.” Fundstrat’s Sean Farrell also struck a cautious note, stating, “I think we also are in a scenario where there's just an absence of catalysts," he said in a video sent to clients on Thursday.” BTC started the previous weekend in positive territory, rising 1.15% on Friday and settling at $109,555. Price action remained positive on Saturday and Sunday as BTC rose 0.45% and 0.44% to cross $110,000 and settle at $110,536. Selling pressure returned on Monday as the price fell nearly 4% and settled at $106,557. The bearish sentiment intensified on Tuesday as BTC slipped below $100,000, falling to a low of $98,892. However, it rebounded from this level to reclaim $100,000 and settle at $101,468. Despite the overwhelming selling pressure, BTC recovered on Wednesday, rising over 2% and settling at $103,869. BTC returned to bearish territory on Thursday, dropping to a low of $100,235 before settling at $101,290. The price slipped below $100,000 again on Friday, falling to a low of $99,170 before recovering and settling at $103,284, ultimately rising nearly 2%. Source: TradingView Price action was mixed over the weekend as BTC fell 0.97% on Saturday before rising 2.36% on Sunday and settling at $104,964. Buyers retained control on Monday as BTC rose 1.23% and settled at $105,979. Buyers lost momentum on Tuesday as BTC fell nearly 3% and settled at $103,009. Sellers retained control on Wednesday as the flagship cryptocurrency fell 1.33% to $101,639. BTC registered a sharp uptick in volatility and selling pressure on Thursday. As a result, the price fell below $100,000 for the first time since June, dropping to a low of $97,870 before settling at $99,614. Selling pressure intensified on Friday as BTC plunged below $95,000, falling to a low of $93,951 before settling at $94,503. The price has recovered during the ongoing session, trading around $95,962. Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
