MOOSPEAK
Bitcoin Below!
The Greyscale Bitcoin Mini Trust (BTC) is 45% off its October 6th high. (It was down 53% and overbought before it jumped 7% on Friday.) So why is Bitcoin having so much trouble?
Risk Sentiment: Broadly speaking, there is a lot of risk-off sentiment in the US Tech Market these days. Artificial Intelligence has investors second-guessing job growth, power availability, productivity and its impact on inflation and interest rates. Bitcoin has declined alongside a sell-off in tech and risk assets, with investors rotating out of speculative positions. Lower risk sentiment generally hits crypto hard.
Institutional Selling: Large institutional holders, including spot Bitcoin ETF investors and companies heavily exposed to Bitcoin have sold into weakness, creating net outflows that press prices lower. Sustained institutional selling and significant large-holder selling (by “whales”) and forced liquidations — including leveraged positions — have accelerated the drop, especially as key price levels broke.
Technical and Momentum Factors: Technical indicators (like downside breakouts and liquidation cascades in derivatives markets) can amplify moves, turning corrections into sharper declines when key supports fail. In addition broader economic signals — such as continued expectations of higher interest rates, strong U.S. dollar dynamics, and tighter financial conditions — make risk assets less attractive, further pressuring Bitcoin.
Weaker Investor Confidence: Major financial institutions and the US media are promoting a weaker confidence environment among investors as Bitcoin transitions from a speculative rally into a “reset” phase of price discovery. US economic data has been improving for months, but doubt remains whether this better news is valid or more propaganda. I tend to think the latest GDP expansion is valid, but that the Trump corporate tax cut is not only less direct than a personal tax cut but is tempered by tariffs which are a personal tax hike for Americans. Net-net we’ll still see the benefits of lower taxes, but it may take a little longer.
Contrary Thinking: Long time readers know this site is fond of momentum investing, going with what’s working, buying high and selling higher, and above all never trying to catch a falling knife. By the same token, Bitcoin is one of those investments that has all the qualities of a lottery ticket but something more. There’s a sense that if you live long enough and remain up-to-date on your heart meds that you and/or your descendants can wait out the latest 50% crash in Bitcoin and treat it like a 50%-off sale. It always seems to come back and then some.
Just sayin’… not advisin’,
(AI was used to prepare this article.)
