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Author: Daniel Kim, Ryan Yoon, Jay Jo, Source: Tiger Research
Key takeaways
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The U.S. government shutdown has lasted 35 days, causing short-term pressure——The U.S. Treasury Department TGA liquidity freeze, Polymarket forecast shows that the possibility of this shutdown lasting beyond mid-November is 73%
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Record liquidations hit market sentiment——The forced liquidation on October 10th amounted to US$20 billion, affecting 1.6 million traders. The market cleared excessive leverage, triggering a temporary correction.
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Fundamentals remain solid and the long-term upward trend remains unchanged——Global liquidity expanded, M2 broad money supply exceeded US$96 trillion, institutional investors maintained strategic buying, and the Bitcoin target price remained unchanged at US$200,000.
Bitcoin enters adjustment phase
After hitting an all-time high of $126,200 on October 6, Bitcoin has fallen about 20% over the past month and is currently consolidating near $100,000.The total market value of cryptocurrency has also fallen from US$4.35 trillion in early October to the current US$3.3 trillion, a drop of 22%. As a result, both Bitcoin and altcoins are facing correction pressure.
The drop was not due to any negative cryptocurrency-related news.The U.S. government shutdown, the Fed Chairman’s shift in stance, and falling leverage are the main contributors to the current weakness.
US federal government shutdown crisis
The U.S. federal government shutdown has lasted for 35 days since October 1, which is the main reason for the current market correction.The crisis has stalled government spending and created a policy void at major financial regulators, including the U.S. Securities and Exchange Commission (SEC), limiting macro liquidity flows into cryptocurrency markets.The payment freeze in the U.S. Treasury General Account (TGA) is particularly hampering liquidity that would otherwise be flowing into capital markets.Typically, when the TGA stops paying, the government stops spending but continues to collect taxes and issue bonds, draining liquidity from the system.
While U.S. government shutdowns have historically ended relatively benignly, Republicans and Democrats remain deadlocked in budget negotiations.There’s a 73% chance the situation will continue beyond mid-November, according to Polymarket, which has raised concerns that the recent market correction will continue.
Powell’s hawkish remarks
Federal Reserve Chairman Jerome Powell said after the Federal Open Market Committee (FOMC) meeting on October 29 that a December interest rate cut is “far from a certainty.”The remarks lowered the probability of a December rate cut from 95% to 68%, reducing expectations for loose monetary policy and exacerbating tensions with cryptocurrency market liquidity.
The aftermath of the liquidation on October 10
President Trump’s tariff threats against China triggered a chain reaction on October 10 that became the largest leveraged liquidation in cryptocurrency history, amounting to approximately $20 billion.More than 1.6 million traders were liquidated, and the market has been exhibiting extreme volatility since.The latest news that $45 million worth of Bitcoin was moved from a wallet allegedly linked to Barron Trump has further dampened investor confidence.However, this adjustment reduced highly leveraged positions and curbed market speculation to a certain extent.
Adjustments in the artificial intelligence sector spread
Public equity markets weakened on Nov. 4 as investors expressed concerns about the valuations of artificial intelligence-related companies.Despite Palantir’s strong financial results,Scion Asset Management’s Michael Burry discloses short position, the company’s stock price still fell 7.94% in after-hours trading.This adjustment in the artificial intelligence sector has also affected the cryptocurrency market.As public equity markets sell off high-growth stocks, the cryptocurrency market faces greater selling pressure due to its higher volatility.
Fundamentals remain unchanged
We maintain our Bitcoin price target of $200,000.Market uncertainty seems high at the moment, but we need to focus on the certainties that won’t change.The global liquidity expansion momentum is obvious, the M2 money supply has exceeded 96 trillion US dollars, and institutional support for digital assets remains solid.Major traditional financial companies continue to grow, the ETF market is structurally expanding, and stablecoins are gradually being adopted by institutions – these mid- to long-term growth drivers remain unchanged.
Throughout American history, government shutdowns have always ended with bipartisan consensus, and this time is no exception—it’s just a matter of time.The direction of the Fed’s interest rate cuts itself has not changed, but the speed remains to be seen.The bottom line is that Bitcoin’s fundamentals haven’t changed at all.The network is operating stably, and institutional investors continue to strategically increase their holdings.
When we consider these constants, the current correction stems from a liquidation of overleverage and temporary macro uncertainty—not enough to break the long-term uptrend.
