Bitcoin is losing. What's really pushing the stock down – and why some of the market is already seeing a rebound
Although many investors made profits, it is important to emphasize that in October alone, approximately USD 3.4 billion flowed into ETFs. resources. This mix of short-term fear and long-term demand is behind today's decline… and the hope of reversing it.
The current decline has a very down-to-earth catalyst. Investors in ETFs took profits and reduced their positions, which mechanically increased the spot supply in the market and pushed the price lower. At the same time on the horizon there are arguments for a soft landing. October data confirms that structural demand from funds has not disappeared – net inflows are positive despite episodes of daily and weekly outflows.
This is the basis for the cautious optimism of practitioners from the crypto and blockchain infrastructure markets quoted by DL News. Consolidation in the range of PLN 105,000–115,000. hole. This is, in their opinion, a break for breathing after the rally, not the end of the trend.
Check also: Bitcoin most expensive in history. Here's the main reason
Previous adjustments were different
The main difference from previous corrections is that the macro background is changing. The Federal Reserve announced that it will end its balance sheet contraction (QT) on December 1. After November, proceeds from MBS (mortgage-backed securities – securities based on a pool of mortgage loans, the repayments of which finance payouts to investors) will start to be reinvested in treasury bills. The decision was accompanied by an October rate cut of 25 basis points, which means that the strongest liquidity drain from the system has ended.
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The crypto market historically breathes better when bank reserves stop dwindling — and this is the essence of the thesis about the local bottom.
Signals of change are also visible in current operations. On Monday, the Fed injected $29.4 billion into the system. by Standing Repo Facility. This the largest such action since the pandemic and a response to the tensions at the end of the month. Repo is not the “new QE,” but it improves financing conditions in the short term by lowering rates and increasing reserves — which tend to support riskier assets, including bitcoin. Such episodes emerged after the use of the Fed's liquidity tools shot to records, signaling that the tightening policy has reached the limits of the system's comfort.
However, one cannot ignore fiscal policy, which in 2025 has become as important a driver of liquidity as the Fed itself. The funding paralysis of the US government that has been ongoing since October 1 has limited some spendingand their unfreezing after the end of the shutdown means a quick inflow of cash into the economy and an increase in reserves.
In turn, the opposite operation, i.e. replenishing the TGA balance (Treasury General Account – the main cash account of the US Treasury Department at the Fed, through which government receipts and expenses flow. It affects bank reserves) at the Fed, can temporarily drain liquidity from the banking sector. This is why the end of QT and the possible end of the shutdown are perceived by the market as a duo of factors that may tip the scales in favor of risky assets in the coming weeks.
This year, bitcoin has increased by 14% since January. For comparison, gold improved its valuation by as much as 54%.
