Bitcoin (BTC USD) price briefly fell below the $100,000 floor on today for the first time since June 23, pressured by macro headwinds and over $1 billion in liquidations on November 4.
Another round of over $1 billion in liquidations hit the market on November 3. For now, traders might face heightened volatility as US dollar liquidity undergoes structural tightening.
Bitcoin (BTC USD) price traded at $102,926.17 at press time, up 1.4% in the past 24 hours. The brief leg up followed a correction on November 4, when it closed down nearly 5% at $101,497.22.
Analysts Expected $105,000 Test
Crypto Stocks Freedom shared on November 5 that Bitcoin was breaking back above $102,000. The analyst said he remained long and believed it was more likely the asset would test $105,000 before potentially dropping below $100,000.
He warned that November 5 was a significant event, as the Supreme Court would decide on the legality of Trump’s tariffs. Additionally, he told traders to expect volatility and avoid excessive risk.
The 15-minute chart showed Bitcoin (BTC USD) price consolidated near $102,000 on November 5. The analyst’s projection outlined two possible paths: a green line indicated continuation toward a channel between $104,000 and $105,000.
In contrast, a red line plotted a potential drop back toward the $100,000 support zone in the event of rejection.
Ash Crypto also shared on November 5 that Bitcoin (BTC USD) was forming a hidden bullish divergence in the one-week timeframe.
He said he hoped for the pattern to play out, displaying a weekly chart where the Bitcoin price tested a support line near $101,000.
The Relative Strength Index exhibited a series of higher lows, resulting in divergence with the price action. A yellow trendline on the RSI suggested momentum remained intact despite recent volatility.
Liquidity Tightening Drove November Weakness For Bitcoin (BTC USD) Price
ET, a researcher at SoSoValue Community, posted on November 4 an explanation for why the Bitcoin price was going down.
The analysis noted that the US dollar liquidity was undergoing structural tightening. Key indicators included the Treasury General Account balance nearing $1 trillion, draining liquidity from the market.
Short-term funding market stress intensified, with the Secured Overnight Financing Rate (SOFR)-Federal Funds Target Rate (FDTR) spread widening to +30 basis points.
The Federal Reserve was forced to restart temporary overnight repo operations, injecting nearly $30 billion in liquidity.
It marked the first such move since the 2019 repo crisis. The liquidity vacuum stemmed mainly from the US government shutdown.
Facing a budget impasse and risk of shutdown, the Treasury pre-funded by issuing large amounts of debt.
Cash was locked into the TGA account and directly reduced bank reserves. With fewer market dollars in circulation, risk assets came under pressure.
Bitcoin, being the most liquidity-sensitive asset, suffered first. ET said the outlook was not entirely bleak.
Historically, every time the Treasury hoarded cash and liquidity tightened to an extreme, a market reversal was often near.
Government Reopening Could Trigger Bitcoin (BTC USD) Rebound
As of November 5, the government shutdown reached a record duration. Fiscal, economic, and social pressures rapidly accumulated.
SNAP food assistance programs were constrained, airport security and federal air traffic control faced temporary suspensions, and both consumer and business confidence declined.
Signs of bipartisan compromise emerged, especially as the recent stock market pullback increased pressure to resolve the shutdown.
Market expectations suggested the Senate could push a compromise before the Thanksgiving recess on November 15.
Once the government reopened, Treasury spending would resume. The TGA balance should decline, liquidity would return, and risk appetite might rebound.
As a result, Bitcoin price could be entering its final leg down before a recovery. The intersection of renewed fiscal spending and the next Fed rate-cutting cycle marked the beginning of a new liquidity phase.
As a non-yield-bearing asset, the Bitcoin (BTC USD) price was susceptible to changes in liquidity conditions. Tightening US dollar liquidity typically exerted downward pressure, one of the main reasons behind weakness since mid-October.
Fed Injections Eased Short-Term Stress
As of October 31, ON RPs stood at $29.4 billion, compared with a peak of $49.75 billion in September 2019.
These operations, conducted with Treasuries as collateral, provided primary dealers with overnight cash. The Fed’s move reflected real funding stress at the short end.
While quantitative tightening neared completion, shrinking reserves strained funding markets. The repo restart marked a shift from passive balance sheet reduction to active liquidity management.
Although smaller than 2019 levels, the $29.4 billion operation was symbolically important. It signaled that liquidity gaps breached the Fed’s tolerance threshold.
The operation temporarily compressed SOFR–repo spreads, easing funding pressure and creating a mini quantitative easing (QE) effect if continued.
ET predicted Bitcoin (BTC USD) price might be undergoing its final leg down, with a liquidity rebound likely once fiscal spending restarted and the next rate-cut cycle began.
Prediction markets and institutions such as Goldman Sachs expected the government to reopen by mid-November.
The TGA balance, now near $1 trillion, was the leading cause of current liquidity stress. Once the government reopened and spending resumed, TGA would decline, dollar liquidity would recover, and the Bitcoin price would likely gain support.