Finance

Bitcoin’s $100,000 Plunge: How the U.S. Shutdown Triggered Crypto’s $1.3 Billion Liquidation Crisis

Bitcoin‘s price dropped below $100K, triggering $1.3B liquidations amid market downturn.

byAndres Castro

November 4, 2025, 4:59 PM

Three physical gold Bitcoin coins lying flat and overlapping on a brightly lit, solid orange background.

A close-up of three physical Bitcoin cryptocurrency tokens on a flat, vibrant orange surface. By MDL.

Executive Summary

Bitcoin’s price plummeted below $100,000 for the first time in six months, triggering $1.3 billion in liquidations across the cryptocurrency market.

The sharp downturn is largely attributed to the ongoing U.S. government shutdown, which has reduced market liquidity by siphoning an estimated $700 billion via the Treasury General Account.

Other major cryptocurrencies like Ethereum, XRP, Solana, and Dogecoin also experienced significant drops, with broader market volatility influenced by macroeconomic factors such as President Trump’s past tariff threats.

The Story So Far

The recent sharp decline in the cryptocurrency market, pushing Bitcoin below $100,000, is primarily driven by the ongoing U.S. government shutdown, which is impacting market liquidity and accelerating the asset’s fall. This situation is exacerbated by an increase in the government’s Treasury General Account, which has reportedly siphoned significant funds from the market, and broader macroeconomic uncertainties including President Trump’s past tariff threats against China and dwindling prospects for a U.S. interest rate cut.

Why This Matters

The sharp decline of Bitcoin below $100,000, triggering $1.3 billion in liquidations across the crypto market, underscores the significant influence of traditional macroeconomic factors, such as the U.S. government shutdown impacting liquidity, on digital asset valuations. This event highlights the cryptocurrency sector’s inherent vulnerability to broader financial and political instability, prompting a widespread market correction and a notable shift of investor funds from risk assets towards stablecoins.

Who Thinks What?

The sharp downturn in Bitcoin’s price and subsequent market liquidations are largely attributed to the ongoing U.S. government shutdown and its impact on market liquidity.

Analysts suggest that Bitcoin was already nearing the end of its prolonged bull run, with the U.S. government shutdown and the increase in the Treasury General Account (TGA) further accelerating its decline by reducing market liquidity.

Brian Huang, co-founder and CEO of Glider, characterized the situation as “Crypto’s Black Friday,” noting that many investors have withdrawn funds from risk assets and rotated into stablecoins.

Bitcoin’s price plummeted below the $100,000 threshold on Tuesday for the first time in six months, triggering a massive $1.3 billion in liquidations across the cryptocurrency market. This sharp downturn, which saw other major digital assets like Ethereum, XRP, Solana, and Dogecoin also experience significant drops, is largely attributed to the ongoing U.S. government shutdown and its impact on market liquidity.

Bitcoin briefly touched $99,954 on Coinbase and $99,990 according to price tracker CoinMarketCap, before recovering slightly above $101,000. The leading cryptocurrency has fallen over 5% in the last 24 hours, approximately 12% over the past week, and more than 20% since reaching a new all-time high above $126,000 in early October. The last instance Bitcoin traded below six figures was in early May.

Market Liquidations Intensify

The recent price drop led to $1.3 billion worth of positions being liquidated over the past 24 hours, exceeding the $1.1 billion tally observed on Monday morning. Over $1.1 billion of these liquidations were from long positions, which are bets on asset prices increasing. Bitcoin accounted for $470 million of these liquidations, with Ethereum following at approximately $377 million.

Macroeconomic Headwinds

Analysts suggest that Bitcoin was already nearing the end of its prolonged bull run when the U.S. government shutdown accelerated its decline. They point to the increase in the government’s Treasury General Account (TGA), which has reportedly siphoned about $700 billion from the market and pushed overnight repo usage to record highs, thus reducing overall market liquidity.

Brian Huang, co-founder and CEO of Glider, characterized the situation as “Crypto’s Black Friday,” noting that many investors have withdrawn funds from risk assets and rotated into stablecoins, which have reached all-time highs in circulation. This sentiment was echoed by earlier, failed predictions from Myriad users, who had assigned a 44% chance of BTC rising to $120,000 just 24 hours prior.

Broader Market Impact

Beyond Bitcoin, other major cryptocurrencies experienced significant losses. Ethereum saw a nearly 10% daily decline, falling below $3,300, while XRP dropped 7.5% to $2.17. Solana decreased by 8% to $154, and Dogecoin was down approximately 7% to $0.157. Macro factors such as President Trump’s past tariff threats against China and dwindling prospects of a third U.S. interest rate cut before year’s end have also contributed to the market’s volatility.

The cryptocurrency market is currently navigating significant selling pressure, primarily driven by the U.S. government shutdown’s impact on liquidity and broader macroeconomic uncertainties. This has resulted in substantial liquidations and a notable decline across major digital assets, pushing Bitcoin below a critical psychological price point.