What Caused Today’s Bitcoin Crash? Understanding the Latest Price Drop

Bitcoin has seen a dramatic downturn recently, with the price plummeting below $98,000, a level not witnessed for nearly six months. The world’s leading cryptocurrency experienced a sharp decline during Thursday trading, forcing it towards lows that recall early May levels.

This price drop has been largely attributed to significant selling activity by long-term holders, a decrease in institutional demand, and overall market fatigue following the prolonged U.S. government shutdown. Additionally, analysts are pointing to a range of macroeconomic factors that have contributed to this sudden shift.

Bitcoin Crashing: Key Factors Behind the Sharp Drop

Bitcoin’s price fell from an intraday high of around $104,000 to low points nearing $97,870. This sharp decline erased earlier gains and confirmed a downward trend gaining momentum. Bitcoin Magazine Pro reports that over 815,000 BTC have been sold by long-term holders in just 30 days, marking the highest level of such selling since early 2024. As the market adjusted, more than $3 billion in realized gains were absorbed on November 7, prompting further profit-taking.

According to CryptoQuant, institutional buying has now dipped below daily mining supply, creating additional selling pressure. Currently, Bitcoin hovers around the 365-day moving average of approximately $102,000. Analysts warn that a failure to reclaim this critical level could invite even deeper losses if demand continues to dwindle.

Bitfinex analysts have observed that this recent downturn mimics mid-cycle corrections seen previously. They noted that the drop from October’s peak aligns closely with the typical 22% pullback experienced during the 2023-2025 bull market. Interestingly, around 72% of existing Bitcoin remains profitable even with prices hovering near $100,000, indicating a cautious but not entirely panicked market sentiment.

JPMorgan analysts estimate Bitcoin’s production cost to be roughly $94,000, a threshold historically considered a price floor. Rising network difficulty has played a role in increasing production costs. Despite the current turbulence, their 6–12 month outlook remains optimistic, projecting possible upside towards $170,000.

The recent reopening of the U.S. government has added another layer to the volatile market climate. The shutdown imposed liquidity stress as the Treasury General Account swelled. Market analyst Timot Lamarre characterized Bitcoin as a “canary in the coal mine” regarding tightening liquidity. With the government back in operation until at least January 30, it is anticipated that liquidity will gradually re-enter the system.

However, several agencies, including the IRS, are facing significant backlogs, and disruptions in air travel and national parks may take time to mend. These delays and backlogs contribute to an already fragile economic backdrop, influencing Bitcoin in unpredictable ways.

How the Broader Market Shaped Bitcoin’s Decline

Throughout this downturn, Bitcoin’s correlation with the Nasdaq has intensified, with recent reports from Wintermute suggesting that Bitcoin is now more reactive to market downturns than to upswings. This “negative skew,” typically seen in bear markets, has emerged despite Bitcoin remaining less than 20% of its all-time high.

Two significant trends are driving this behavior: first, a substantial shift of capital into tech stocks in 2025 has drawn attention away from the cryptocurrency market. Second, the liquidity in the crypto space is markedly thinner compared to earlier bull cycles. A slowdown in stablecoin issuance and ETF inflows, coupled with a weakened order book depth across exchanges, has resulted in sharper downward movements than upward ones.

Nonetheless, Wintermute posits that Bitcoin continues to display resilience. Despite prevailing pressures, its price remains relatively high compared to historical norms, reflecting its growing status as a macro-sensitive asset.

Current market trends indicate that Bitcoin’s downward path may persist in the short term as investors await stronger demand. With prices around $98,000, the market exhibits caution, though analysts still foresee long-term support from production costs and macro liquidity influences. Observers will closely monitor whether Bitcoin can stabilize above critical levels in the coming days.

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