Crypto analysts say Bitcoin’s recent price drop is largely unrelated to the US government shutdown or fears of an AI-driven tech bubble.
Some market observers had speculated that the cryptocurrency’s fall to its lowest level in nearly eight months was linked to lingering macroeconomic uncertainty from last week’s US government shutdown.
Others pointed to worries that a potential AI bubble might be spilling over into crypto markets. Victoria Scholar, head of investment at Interactive Investor, recently commented:
“Fears of an AI bubble and concerns about the market’s heavy dependence on a handful of tech giants have caused investors to dial back their exposure to speculative assets such as Bitcoin.”
However, on-chain analyst Rational Root challenged the theory that the US shutdown caused Bitcoin’s decline during a podcast published on YouTube on Wednesday.
“I wouldn’t attribute the drawdown in Bitcoin solely to the government shutdown,” Rational Root said.
He suggested that the cryptocurrency’s drop from its October all-time high of $125,100 was more likely driven by “excessively high levels of futures leverage in Bitcoin.”
It’s not about AI fears either
Similarly, Bitcoin analyst PlanB dismissed the notion that concerns over an AI bubble are impacting Bitcoin’s price.
“We can cross the AI bubble theory off the list of reasons Bitcoin is down,” PlanC wrote in a post on X Wednesday, noting Nvidia’s “very strong earnings.”
Nvidia reported record revenue of $57 billion for its third quarter ending Oct. 26, up 62% from a year ago and surpassing Wall Street estimates of $54.7 billion.
PlanC added that the list of potential causes for Bitcoin’s decline is “getting smaller and smaller.”
Fewer explanations remain for Bitcoin’s slump
“Only the four-year cycle theory and delayed global liquidity remain,” he said, adding that the four-year cycle “has a high probability of breaking,” a topic that has sparked ongoing debate within the crypto community.
Swan Bitcoin CEO and Bitcoin advocate Cory Klippsten recently told Cointelegraph Magazine that “there is a very good chance that Bitcoin’s famous four-year price cycles are over, killed by institutional adoption.”
Global liquidity, often measured by the M2 money supply, remains a key focus for Bitcoin investors. Strike CEO Jack Mallers recently noted, “Bitcoin is the most sensitive to liquidity. It moves first. It’s a truth machine.”
Bitcoin was due for a reset
On-chain analyst Rational Root said Bitcoin now has a “clean slate,” presenting a potential opportunity for further gains.
“In the past three years of this bull market, we’ve seen three resets comparable to bear market levels,” he explained, adding that each reset has “allowed us to move higher.”
“I expect the movement to be more gradual, to be fair,” Root said.
Meanwhile, some analysts have suggested that the end of the US government shutdown and the return to regular legislative sessions could pave the way for a wave of new crypto exchange-traded fund (ETF) approvals by the Securities and Exchange Commission (SEC) in 2026.
