Bitcoin Plummets to near $80,000 Amid Broad Market Sell-off
New York – Bitcoin experienced a sharp decline on Monday, falling to a low of approximately $80,000 as a confluence of factors triggered a widespread sell-off in the cryptocurrency market. The drop continues a period of volatility for the digital asset, which recently reached all-time highs near $73,750.
The recent downturn is attributed to a combination of macroeconomic pressures, technical factors, and diminished liquidity, according to industry analysts. Concerns surrounding Federal Reserve interest rate policy, a cooling labor market, and a broader “risk off” sentiment in the technology sector – fueled by high valuations in artificial intelligence stocks – are all contributing to the downward pressure. The potential for a U.S. government shutdown has also added to investor uncertainty.
“A likely blend of factors has put bitcoin into this seeming spin cycle including fed rate sentiment, labor market, general tech ‘risk off’ mood fostered by frothy AI multiples and a dash of margin calls to boot,” stated Bitwise Asset Management in an email.”The government shutdown backdrop has also not helped.”
Experts emphasize that meaningful pullbacks are characteristic of Bitcoin’s history and encourage a long-term investment outlook. “It is vital to keep in mind that pull backs of this magnitude are on brand for bitcoin and better to focus on the long term hold fundamentals,” Bitwise added.
Further exacerbating the decline is a reduction in market liquidity, notably heading into the holiday week, and the unwinding of leveraged positions. Matt Williams, head of financial services at Luxor, noted that “Liquidity continues to dry up due to bearish sentiment, which is exacerbated heading into the holiday week when liquidity historically shrinks anyway.” He also reported “more forced liquidations amongst participants that took on long positions around $90k,” and rumors – yet unconfirmed – of large crypto market makers liquidating ample long Bitcoin derivatives positions.
David Brickell, head of international distribution for FRNT, characterized the losses as a continuation of trends observed in recent weeks. He pointed to pressure on the technology sector, even following strong earnings from NVIDIA, and continued tightness in U.S. funding markets. “key funding rates are still elevated, even as the TGA begins to draw down, which is limiting the usual relief that would follow a fiscal liquidity injection,” Brickell stated via Telegram, referring to the Federal Reserve’s Treasury general Account. He added that breaking through key technical levels triggered systematic selling strategies, leaving the market “without a natural bid” due to the combination of tighter liquidity, systematic selling, and a lack of new bullish catalysts.
