Bitcoin prices plummeted early in the week. However, the weekend rally significantly reversed the losses and stabilized around $106,000. The weekly decline rate was close to -10%, but ended at -4.99%.
The backlash was driven by news that the U.S. government shutdown would soon end and President Trump’s social media posts.
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‘Big Short’ rumors caused initial plunge
The initial decline was triggered by deteriorating conditions in the U.S. stock market. On Tuesday, news broke that famous bear Michael Burry had established a $1.2 billion short position in AI stocks such as Nvidia (NVDA) and Palantir (PLTR). The news prompted skeptical investors to sell, and the three major U.S. stock indexes fell across the board.
Despite the fundamental problems lying in AI stocks, the decline in the cryptocurrency sector was even greater, with BTC down about 5% on the day and altcoins posting even bigger losses.
On-chain analysts believe this sharp decline is due to an exodus of institutional investors. Since the “Black Friday” crash on October 10, major companies have been reducing their positions in cryptocurrencies. Then Tuesday’s stock market turmoil disrupted the already fragile supply-demand balance.
market imbalance Rapid deterioration, with Bitcoin falling below psychological support of $100,000 on Wednesdayto a low of $99,000.
Retains 365-day MA as critical support
Analysts were nervous that any further decline would push the stock below the 365-day moving average (MA), a key inflection point that marks the beginning of a bear market.
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Fortunately, the current decline did not break through this line. Bitcoin found support and rallied, successfully holding the 365-day moving average as it did during the previous two crises: the yen carry trade unwind in August 2024 and the tariff crisis in April 2025.
Ethereum (ETH), the second-largest cryptocurrency, plummeted to $3,100 on Wednesday. However, it recovered in line with Bitcoin, surpassing the $3,600 level by Sunday, but the weekly loss remained at -6.55%.
Shutdown resolution will be the main catalyst
Analysts were actively hoping for an end to the month-long U.S. government shutdown amid the prolonged slump. It was widely believed that the government shutdown would halt government spending and reduce market liquidity.
The shutdown furloughed about 750,000 federal employees and caused aircraft delays to spike nearly 10% as air traffic controllers’ pay was suspended. Ultimately, this disrupted critical support programs.
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Raul Pal, founder of RealVision, argued that the suspension of US fiscal policy has worsened market liquidity, and the crypto sector is bearing the brunt of it. He predicted that the government shutdown resolution would be a strong potential catalyst for a bullish reversal.
That idea was tested Sunday when Senate Majority Leader John Thune suggested the government shutdown could end. This news immediately spurred Bitcoin’s rally. Thune’s comments led to significant changes in the Polymarket betting market. The estimated end date of the closure has been changed from November 20th to November 11th.
Trump’s dividend statement increases purchasing intent
At the same time, President Trump’s social media posts provided a new impetus. He wrote: “Those who oppose tariffs are idiots!…At least $2,000 in dividends per person (not including high income earners!)”
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The prospect of direct cash payments to citizens could be channeled into the purchase of stocks or cryptocurrencies. This possibility instantly caused Bitcoin to rise from the $103,000 range to over $105,000.
The week ahead: Politics and the Fed
The most important factor this week is whether the U.S. government shutdown ends quickly. The first procedural vote in Parliament is expected to take place on Tuesday. The impact of these numbers will be limited for now, as the government shutdown halted most macro data collection in the United States for more than a month.
Attention continues to be focused on the possibility that the Federal Reserve will further cut interest rates at the December FOMC meeting. Several influential Fed officials are scheduled to speak this week, including:
Mary Daly (San Francisco Fed President) and Alberto Moussallem (St. Louis Fed President) attended on Monday, and on Wednesday, John Williams (New York Fed President), Anna Paulson (Philadelphia Fed President), Rafael Bostic, Chris Waller, Stephen Millan, and Susan Collins attended.
The content of these talks is expected to have a significant impact on Bitcoin’s volatility.
