Bitcoin (BTC) Price is Dumping: Here are 4 Reasons Why

Bitcoin’s (BTC USD) savage price dump is rattling the crypto faithful this week, with market volatility firing on all cylinders.

What’s behind the carnage? According to Bitcoin researcher and trader Ash Crypto, four interconnected factors are hammering the BTC price.

From options expiration and US political drama to economic surprises and leverage liquidations, investor nerves are on a knife-edge.

Options Expiry: Bitcoin (BTC USD) Price Volatility Unleashed

Let’s be honest, this week’s options expiry has felt like a roller coaster for anyone tracking the Ethereum or Bitcoin (BTC USD) price.

$22 billion worth of options contracts are set to expire, mostly over on Deribit. This always seems to be where the biggest action happens.

Traders know the drill by now: when expiry day arrives and spot prices are teetering near major support, everybody holds their breath.

This is when things can swing wildly in either direction, and you get those frantic moves as folks rush to close, hedge, or double down on their bets.

If you zoom out even a little, it really drives home how much these events matter.

In just a matter of hours, the BTC price tumbled below $110,000, a loss of more than 5%, marking a fresh six-week low.

That kind of drop is enough to spook even seasoned professionals. The ripple effect spreads further than you’d expect, with billions in options unwinding and even the altcoins feeling the heat.

As Bitcoin and disruptive tech pioneer Kyle Chasse commented:

“A $22 billion options expiry added more selling pressure to an already weak setup. Combine that with the usual September seasonality, historically Bitcoin’s worst month, and the stage was set for a sharp flush.”

US Government Shutdown Fears

While crypto isn’t new to political drama, this week’s backdrop is especially unnerving: The odds of a US government shutdown by October 1 have shot up to 63%, and even 77% for the end of 2025, according to Polymarket betting markets and industry trackers.

Historically, shutdowns spark market corrections as traders scramble for risk-off assets, raising liquidity concerns and putting pressure on leverage.

This time, shutdown fears are prompting a decisive risk-off mood: Investors are fleeing to stablecoins and defensive assets, and Bitcoin ETFs are seeing outflows as macro uncertainty climbs.

Crypto historically reacts sharply to US political gridlock, with the BTC price taking a tumble.

Strong US Economic Data

On the surface, good news for the US economy is positive. But in the short term, it usually spells trouble for risk assets.

Second-quarter GDP was revised up to 3.8%, beating the 3.3% expected and marking the strongest growth in years.

Added to that, the US dollar strengthened, which typically has a negative effect on the BTC price.

While strong economic performance supports long-term bullishness, it also lowers the odds of interest rate cuts and keeps financial conditions tight, a reality that doesn’t sit well with highly leveraged crypto traders.

Investors hoping for looser monetary policy are instead facing hawkish talk, compressing risk appetite and driving this week’s crypto sell-off.

Excessive Leverage and Liquidations Hammered BTC Price

Let’s face it. If there’s one thing that really ratchets up the drama in crypto, it’s the use of leverage.

Loads of traders bet big with borrowed money, hoping to supercharge those gains. But as the last week showed, leverage can come back to bite hard.

Just look at what happened: platforms like Binance are letting people leverage up to 200x, sometimes even 500x, and even more traders are using those riskier tools.

The result? $105 million wiped out in liquidations in a single hour, and when you add it all up, over $1.7 billion in leveraged positions got flushed as Bitcoin and Ethereum both slumped between 3% and 9%.

The cascade effect of $1.65 billion in long liquidations really hit the brakes on any attempted bounce and reinforced just how quickly things can unravel.

The Fear and Greed Index Swings Back to Fear

No crypto sell-off would be complete without a sentiment indicator flashing red. The Bitcoin Fear & Greed Index fell to 28 on September 26, solidly in “Fear” territory, exposing the market’s sudden pivot from bullish optimism to risk-averse caution.

This swing is backed by hard numbers: Over $1.6 billion in liquidations and $360 million in ETF outflows hit the crypto space just this week, forcing traders to rethink risk. As investors wait for the latest inflation report, the next macro headline could make or break the BTC price.