Key Takeaways
- Bitcoin experienced a significant price drop, briefly erasing its year-to-date gains following weekend market declines.
- The US government shutdown’s conclusion on Thursday did not immediately provide the expected relief to crypto markets.
- Factors contributing to Bitcoin’s volatility include US economic policies like trade tariffs and long-standing government shutdowns, alongside significant selling pressure from long-term holders (whales).
- Despite price pullbacks, some analysts remain optimistic about Bitcoin’s long-term prospects, citing strong underlying fundamentals and potential for institutional adoption.
Bitcoin’s Price Dip Amidst Market Volatility
Bitcoin (BTC) saw a sharp decline over the weekend, temporarily wiping out all its gains for the year. The cryptocurrency fell to a low of $93,029 on Sunday, marking a 25% decrease from its October all-time high. This downturn occurred despite the expected positive impact of the US government reopening on Thursday. At the start of the year, Bitcoin was trading at $93,507.
According to CoinGecko data, Bitcoin has since seen a partial recovery, trading around $94,209.
CoinGecko
Factors Influencing Market Performance
The year had initially been projected to be a strong one for cryptocurrency markets, especially following the inauguration of US President Donald Trump on January 20th. His administration was anticipated to be the most pro-crypto to date, and many of his promises were expected to be realized.
This period saw increased regulatory clarity, fostering a surge in corporate adoption of Bitcoin as a treasury asset and driving significant inflows into spot Bitcoin exchange-traded funds (ETFs).
However, several macroeconomic and political factors have contributed to considerable price pullbacks throughout the year. President Trump’s trade tariff policies and the prolonged US government shutdown, which lasted a record 43 days before ending on Thursday, have both been cited as contributing to multiple double-digit drops in Bitcoin’s price.
Impact of ‘Whale’ Selling and Cycle Theories
Another significant factor affecting Bitcoin’s price performance has been the selling activity from early investors and large holders, often referred to as whales. This has compressed potential price rallies, even amidst positive industry developments.
Glassnode analysts, however, have suggested that the narrative of OG Whales Dumping may be overstated. They explained that this behavior is typical of late-stage bull markets and represents normal bull-market behaviour rather than an unusual exodus.
“This steady rise reflects increasing distribution pressure from older investor cohorts — a pattern typical of late-cycle profit-taking, not a sudden exodus of whales.”
Other major cryptocurrencies have also seen significant price drops. Ether (ETH) and Solana (SOL) are down 7.95% and 28.3% respectively from the beginning of 2025, with most altcoins experiencing even steeper declines.
Future Outlook and Analyst Perspectives
Industry analysts are currently debating the continued relevance of the four-year Bitcoin cycle thesis, especially considering the increased institutional and regulatory support for crypto markets compared to previous cycles.
Matt Hougan, Chief Investment Officer at Bitwise, is among those who believe Bitcoin is poised for a major upturn in 2026. Hougan attributes this potential boom to the expected effects of the debasement trade strategy. He also anticipates that broader crypto markets will benefit from the growing adoption of stablecoins, tokenization, and decentralized finance (DeFi).
“I think the underlying fundamentals are just so sound,” Hougan stated last Wednesday.
“I just think those are too big to keep down. So I think 2026 will be a good year.”
Expert Summary
Bitcoin’s recent price volatility, marked by a brief erasure of its annual gains, has been influenced by a combination of US economic policies, including government shutdowns and trade disputes, alongside selling pressure from long-term holders. Despite these short-term fluctuations, some industry experts maintain a positive long-term outlook, predicting significant market growth in 2026 driven by fundamental improvements and increasing institutional adoption.
