- Bitcoin fell 4% in 24 hours, dropping below $105,000, and has lost 10% over the past week.
- The two-month U.S. government shutdown is freezing liquidity and forcing miners to sell their Bitcoin holdings to cover costs.
- Technical indicators suggest oversold conditions at $104,209, but further declines to $100,000 remain possible if the support level is breached.
Bitcoin fell below $105,000 on Tuesday, marking a sharp 4% decline in 24 hours and extending weekly losses to 10%. The leading cryptocurrency is facing mounting pressure from deteriorating market conditions and a prolonged U.S. government shutdown that is entering its second month.
The broader risk-off sentiment in equity markets has accelerated the crypto selloff. Widespread liquidations across cryptocurrency exchanges have intensified bearish momentum, leaving traders cautious about near-term prospects.
Government Shutdown Drags on Economic Growth
The ongoing federal shutdown poses significant threats to economic stability. The Congressional Budget Office projects U.S. GDP growth could slow by up to 2% in Q4 2025, potentially erasing between $7 billion and $14 billion in economic output.
This fiscal uncertainty extends beyond traditional markets into digital assets. Bitcoin has proven particularly sensitive to macroeconomic headwinds, with institutional investors pulling back amid regulatory and budgetary paralysis in Washington.
A severe liquidity freeze has emerged as a critical concern. On-chain data reveals troubling shifts in market behavior that suggest deeper problems ahead.
CryptoQuant data indicates that Bitcoin exchange reserves are rising for the first time in six weeks. Investors are moving coins back to trading platforms, typically a signal that they are preparing to sell or hedge against volatility.
Source: Cryptoquant
Miner reserves have dropped to their lowest levels since mid-2025. This decline suggests miners are liquidating holdings to cover operational expenses. The shutdown has eliminated energy subsidies and tax credits that previously supported mining operations, forcing operators to sell Bitcoin to maintain cash flow.
Stablecoin exchange withdrawals have surged to record highs. Traders are rotating into dollar-backed assets, seeking safety as uncertainty deepens. This shift to stablecoins, combined with rising exchange reserves and falling miner holdings, suggests widespread risk aversion.
Source: Cryptoquant
Technical Indicators Show Oversold Conditions
Bitcoin trades at $104,209 at the time of this press release. The Relative Strength Index sits at 29, indicating oversold territory. Historically, such readings have preceded short-term bounces as contrarian buyers step in.
Immediate support holds at $104,000. A successful defense of this level could trigger a recovery toward $105,000, with the potential for an extension to $110,000 if buying pressure materializes.
Source: BTC/USD 4-hour price chart: Tradingview
However, failure to maintain current support opens the door to a test of $100,000. The Moving Average Convergence Divergence (MACD) indicator displays bearish divergence, as the MACD line crosses below the signal line. The histogram displays red bars, confirming persistent selling pressure.
Traders remain divided on whether recovery will materialize quickly once the government reopens. Some analysts expect an immediate bounce as uncertainty lifts. Others warn that damage to market structure may require extended consolidation before sustainable gains emerge.
Disclaimer
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