Bitcoin’s price experienced a significant decline at the start of the week but managed to stage a robust recovery over the weekend, stabilizing around the $106,000 mark. The cryptocurrency ended the week with a loss of 4.99%, after witnessing a near 10% weekly drop earlier.
The initial plunge in Bitcoin’s value was linked to waning investor sentiment in the US stock market, particularly following revelations that notable bear investor Michael Burry had established a $1.2 billion short position in artificial intelligence stocks such as Nvidia and Palantir. This news stirred skepticism among traders, prompting a sell-off that affected major US stock indices and, consequently, caused a sharper decline in the crypto market. In this context, Bitcoin dropped approximately 5% on Tuesday, with altcoins experiencing even steeper losses.
On-chain analysts noted that the decline was exacerbated by an exodus of institutional investors, who had already been reducing their crypto positions since the sharp market correction known as “Black Friday” on October 10. The turbulence in the stock market intensified the already precarious balance of supply and demand for Bitcoin, driving its price below the crucial psychological support level of $100,000 for a time, reaching a low of $99,000.
Market analysts closely monitored the situation, particularly the 365-day Moving Average (MA), which serves as a significant support level. A fall below this line could trigger a bear market. However, Bitcoin found crucial support at this level and bounced back, mirroring its previous recoveries during crisis periods, notably during the August 2024 Yen carry-trade unwinding and the April 2025 tariff crisis. Ethereum, the second-largest cryptocurrency, also faced difficulties, dropping to $3,100 on Wednesday but rebounding above the $3,600 threshold by Sunday, ending the week down 6.55%.
As the market remained under pressure, analysts were hopeful for a resolution to the month-long US government shutdown, which was believed to be constraining market liquidity due to paused government spending. The shutdown has led to around 750,000 federal employees being furloughed and has reportedly increased flight delays by nearly 10% due to pay suspensions affecting air traffic controllers. Raoul Pal, the founder of RealVision, indicated that the cessation of fiscal policy was damaging liquidity across markets, with the crypto sector particularly affected. He suggested that resolving the shutdown could serve as a catalyst for a bullish trend.
On Sunday, Senate Majority Leader John Thune’s comments hinting at a possible end to the shutdown sparked a rally in Bitcoin, causing a notable shift in the betting market on Polymarket, which adjusted the anticipated end date for the shutdown from November 20th to November 11th.
Additionally, a comment from former President Trump on social media added further fuel to the buying impulse. He suggested that those opposed to tariffs were “FOOLS” and proposed a direct cash dividend of at least $2,000 for citizens, excluding high-income earners. The prospect of cash payments being funneled into stock or cryptocurrency investments pushed Bitcoin’s price up from the $103,000 range to over $105,000.
Looking ahead, the primary focus will be on the potential resolution of the government shutdown, with an initial procedural vote in Congress anticipated soon. The ongoing suspension of US macro data collection for over a month means that economic figures may have limited impact in the short term. Market participants are also paying close attention to possible statements from several Federal Reserve officials this week. Key speeches from prominent figures such as Mary Daly, Alberto Musalem, and John Williams could lead to significant volatility in Bitcoin and the broader crypto market.
