Bitcoin (BTC-USD) dropped more than 6% on Tuesday, briefly falling below $100,000, its lowest point since June. The cryptocurrency is now about 20% lower than its all-time high above $126,000 reached in early October. Investor worries over the government shutdown and slower economic growth triggered the sell-off.

Large Investors Drive Market Weakness

Sean Farrell, head of digital assets at Fundstrat, said that “whale selling” has increased over the past weeks. “Whales — they continue to hammer price,” Farrell noted, referring to billions of bitcoin moved from private wallets to exchanges for sale.

Compass Point analyst Ed Engel reported that long-term holders have sold over 1 million bitcoin since the end of June, transferring wealth to new owners. “While selling from Long-term Holders is a common feature in bull markets, retail spot buyers have been less engaged than prior cycles,” Engel said. He also mentioned that bitcoin ETF inflows have slowed recently.

Economic Concerns and Government Shutdown Affect Crypto

Data showed the manufacturing sector contracted in October for the eighth straight month. Fundstrat strategists highlighted that the government shutdown is delaying spending from the Treasury General Account, restricting liquidity.

Farrell explained, “The government shutdown's likely extension into December delays expected TGA drawdowns and stalls liquidity tailwinds that were expected to support risk assets into year-end.”

Analysts Predict Year-End Volatility

Despite the decline, Farrell said an end to the shutdown could act as a positive catalyst for cryptocurrency prices. “For now, I think this is just some volatility that we're going to have to manage,” he said. Fundstrat forecasts a year-end bitcoin price range between $150,000 and $200,000.

PHOTO: UNSPLASH

This article was created with AI assistance.