October and November, historically bullish months for Bitcoin (BTC) and altcoins, are not unfolding as anticipated in 2025. A significant collapse occurred in October following US President Donald Trump's announcement of tariffs on China. While the collapse on October 11 was recorded as the largest liquidation event in history, the downward trend continued into the first week of November.
Amidst speculation about whether the declines will persist, Citibank has evaluated the recent drops in Bitcoin's price.
Why Did Bitcoin Fall?
According to Coindesk, Citi analysts attributed Bitcoin's decline to a liquidity shortage. They also observed that Bitcoin's ongoing weakness serves as a warning for the Nasdaq.
Citi cited measures by the US Treasury Department aimed at reducing liquidity and a decline in bank reserves as contributing factors to Bitcoin's weakness. However, the institution also predicted a combined recovery for Bitcoin and the Nasdaq if liquidity improves by the end of the year.
Citibank stated that Bitcoin fell due to a liquidity crunch and has decoupled from the Nasdaq. Citi analysts noted that Bitcoin's trading patterns have historically shown a close correlation with the Nasdaq 100 index.
Nasdaq's earnings, in particular, demonstrated a marked improvement as BTC's price moved above its 55-day moving average. However, Bitcoin has recently fallen below its 55-day moving average, which is now leading to a worsening situation for the stock market as well.
Citi observed that while the Nasdaq maintains relative strength due to the AI craze, it faces a risk of decline stemming from Bitcoin's weakness, as Bitcoin is more sensitive to liquidity changes. Nevertheless, Citibank added that there remains upside potential for both Bitcoin and stocks as liquidity indicators show signs of improvement.
In this context, Citi analysts indicated that the year-end Christmas Rally is not entirely out of the question, and that a recovery for Bitcoin and the stock market may occur together if liquidity rebounds.