Bitcoin’s recent price plunge has little to do with the recent US government shutdown or with the so-called AI tech bubble, according to crypto analysts. Many market participants had speculated that Bitcoin (BTC) — which recently fell to its lowest level in almost eight months — was still reeling from widespread macroeconomic uncertainty due to the recent US government shutdown, which ended last week.
Others suggested that concerns about an AI bubble are spilling into crypto markets. Victoria Scholar, head of investment for Interactive Investor, recently said:
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, onchain analyst Rational Root pushed back on that US shutdown theory during a podcast interview published on YouTube on Wednesday.
“I wouldn’t contribute the drawdown in Bitcoin all to the shutdown of the government,” Rational Root said.
Instead, the analyst said Bitcoin’s tumble from its all-time highs of $125,100 in October was likely due to “too high levels of futures leverage in Bitcoin.”
AI Bubble Fears Not a Factor for Bitcoin
Meanwhile, Bitcoin analyst PlanB also dismissed the idea that AI concerns may be affecting Bitcoin’s price.
“We can remove the AI Bubble thesis from the list of reasons Bitcoin is down,” PlanC said in an X post on Wednesday, pointing to Nvidia having “very strong earnings.”
On Wednesday, Nvidia reported record revenue of $57 billion for its third quarter ended Oct. 26, up 62% from a year ago and beating Wall Street projections of $54.7 billion.
The analyst said the list of reasons is getting “smaller and smaller.”
Limited Explanations for Bitcoin's Slump
“Only the 4-year cycle astrology narrative and delayed global liquidity remain,” PlanC said.
“And the 4-year narrative has a high probability of breaking,” he said, which has been an ongoing debate within the crypto industry in recent times.
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, which is often tracked using the M2 money supply, is a common topic of discussion among Bitcoin holders. Strike CEO Jack Mallers recently said, “Bitcoin is the most sensitive to liquidity. It moves first. It’s a truth machine.”
Bitcoin Reset Provides Upside Potential
Rational Root said Bitcoin now has a “clean slate” and a potential opportunity for more upside.
“We have actually three times in these last three years in this three-year bull market, we have seen a reset comparable to levels of bear markets,” he said. He added that each one of these resets has “allowed us to move higher.”
“I think it will move in a more gradual structure to be fair,” Root said.
Some market analysts have recently suggested that the US government’s end to the shutdown and return to regular legislative sessions may spark a surge in new crypto exchange-traded fund (ETF) approvals by the Securities and Exchange Commission (SEC) in 2026.