Liquidity conditions are tightening across both traditional and digital asset markets, raising concerns among experts regarding the potential for a significant recovery. Analysts at BitMEX have indicated that the ongoing U.S. government shutdown, which has now extended for 36 days, has exacerbated liquidity challenges by effectively removing $700 billion from the financial system through the Treasury General Account (TGA). Consequently, the TGA has surged to an unparalleled $1 trillion, resulting in a capital withdrawal from risk assets, including cryptocurrencies, and pushing Bitcoin below $100,000 for the first time since June.
The latest corporate earnings reports illustrate the growing liquidity strain. For instance, 3D Systems (NYSE: 3DS) reported a substantial drop in its cash and cash equivalents, which fell by $75.8 million in Q3 2025 due to operational and financing outflows. On the other hand, Jackson Financial Inc. (JXN) noted $216 million in free cash flow at the holding company level, yet maintained that liquidity reserves remain above their intended targets. Chord Energy (CHRD), meanwhile, disclosed $336.3 million in capital expenditures for the third quarter and reported a liquidity standing of $2.1 billion as of September 30. These contrasting results reflect specific industry pressures while also being indicative of broader market vulnerabilities.
BitMEX credits Bitcoin’s 19% plunge from its October high to a combination of waning momentum in its four-year bull run and the overarching liquidity crisis. The prolonged government shutdown has stalled Treasury outflows that typically support risk assets toward the end of the year. Historically, Bitcoin has experienced significant declines—70-80%—in the year following a record high, particularly after the approval of an ETF in 2024, as indicated by an analysis from Yahoo Finance.
Investor apprehension has been heightened by the Federal Reserve’s reluctance to cut interest rates, coupled with eight consecutive months of declining manufacturing activity. Ed Engel from Compass Point noted that since June, long-term investors have sold over 1 million Bitcoin, while retail demand has remained weaker compared to past cycles. He expressed that while there is support above $95,000, immediate catalysts for a turnaround are not anticipated.
Nevertheless, some analysts are exercising cautious optimism. Axel from BlockBeats indicated that the markets might be oversold and could see recovery as short positions are covered, suggesting that a stabilization period may be necessary before any sustained upward trajectory can take hold. BitMEX foresees a significant rebound in liquidity following the resolution of the shutdown, predicting inflows that could align with Bitcoin’s seasonal performance peaks.
Currently, investors are faced with a challenging landscape. While corporate cash flows and the fundamentals of cryptocurrencies show signs of resilience, the confluence of political stalemates, economic sluggishness, and institutional selling continues to subject markets to increased volatility.
