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Bitcoin's rollercoaster year has taken a sharp downturn once again. On Tuesday, the world's largest cryptocurrency slipped under £79,000 ($100,000) for the first time since June, as renewed fears over the US government shutdown and slowing global growth sparked widespread selling.

Once hailed as an unstoppable juggernaut after soaring past £99,000 ($126,000) in early October, Bitcoin has now lost nearly 20% of its value in under a month.

The decline underscores how fragile investor sentiment remains in the face of policy uncertainty and tightening liquidity conditions.

Bitcoin Faces Steep Slide Amid Mounting Whale Activity

Market analysts say that 'whale selling'—large holders offloading vast reserves—has accelerated the slump.

Fundstrat's head of digital assets, Sean Farrell, noted on Monday evening that billions of pounds worth of Bitcoin have moved from private wallets to exchanges, likely preparing for sale.

'Whales—they continue to hammer price,' Farrell said, warning that liquidity pressures in the current environment could prolong volatility.

Compass Point analyst Ed Engel added that more than one million Bitcoins have changed hands since June as long-term holders liquidated positions.

While such selling is common in bull markets, it has coincided this year with weaker engagement from retail investors and dwindling inflows into Bitcoin exchange-traded funds (ETFs).

Bitcoin's Disappointing 'Uptober' Fuels Market Pessimism

Engel observed that October's usually bullish trend failed to materialise, echoing 2018's steep November drop. 'While we see support for BTC above £75,000 ($95,000), we also don't see many near-term catalysts,' he said.

With manufacturing data showing contraction for the eighth straight month and Federal Reserve Chairman Jerome Powell taking a cautious stance on interest rate cuts, Bitcoin traders see few tailwinds.

Both stocks and digital assets have struggled for direction amid muted risk appetite, a pattern reinforced by high inflation and the lingering effects of October's massive liquidation event that wiped out billions in leveraged positions.

Government Shutdown and Liquidity Strains Hit Hard

The ongoing US government shutdown has also contributed to a decline in confidence. Strategists highlight that the Treasury General Account—essentially the government's 'checking account'—remains frozen, delaying drawdowns that were expected to inject liquidity into risk assets.

'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,' Farrell said. Still, he remains cautiously optimistic that a resolution could spark a recovery.

'I'm still optimistic for year-end,' he added. 'For now, I think this is just some volatility that we're going to have to manage.'

Plunge Brings Bitcoin in Line With Broader Market Losses

The downturn has wiped out Bitcoin's summer rally, aligning its performance with the broader risk-asset sell-off. The token plunged as much as 6.5% to £78,900 ($99,963) in New York—the lowest since June. Ether dropped 9.6%, while several altcoins tumbled over 50% from their yearly highs.

'Bitcoin's decline to the June lows reflects a market structure still grappling with the psychological overhang from October's massive liquidation event,' said Chris Newhouse, research director at Ergonia.

He explained that traders' hesitancy has kept open interest in futures far below pre-crash levels, constraining momentum.

Options traders, meanwhile, are bracing for further downside, heavily favouring put contracts with strike prices near £63,000 ($80,000).

Analysts Still See Long-Term Upside for Bitcoin

Despite the gloom, Fundstrat's year-end prediction remains surprisingly upbeat, projecting a price range of £118,000-£157,000 ($150,000–$200,000) if sentiment stabilises and liquidity improves.

For now, the digital asset market remains gripped by uncertainty—caught between macroeconomic caution, technical selling and the ghosts of October's wipeout.

Originally published on IBTimes UK

Tags

Bitcoin, Cryptocurrency