Just a few months ago, Bitcoin was setting record highs, reaching over $126,000. Investors celebrated and experts predicted new peaks. In just six weeks, everything changed: Bitcoin dropped below $82,000, losing more than 35% of its value—marking its worst month since the FTX exchange collapse in 2022.
The main factors were massive withdrawals from Bitcoin ETFs, increased uncertainty around US Federal Reserve policy, and a lengthy government shutdown that delayed key economic data releases. Investors, expecting an imminent rate cut, sold off assets after signals this step would be postponed.
The plunge was also driven by panic selling among investors who bought Bitcoin during its rapid rise. Analysts note that short-term holders sold at a loss, while long-term investors quietly accumulated coins. The market suffered from reduced liquidity after heavy liquidations in October, increased volatility, and unprofitable mining operations.
Broadly, the decline wasn't limited to Bitcoin: US stock indices and tech sector shares also fell, and the crypto fear and greed index reached extreme fear levels. However, statements from the New York Federal Reserve Bank president about a possible rate cut gave hope to investors and helped Bitcoin recover partially.
Experts advise against panicking. They recommend a professional approach to cryptocurrency investments: diversify risks, avoid all-in bets, and remember that, historically, markets often rebound after times of extreme fear.
