Bitcoin’s pullback is driven by futures leverage and liquidity delays, not the US shutdown or AI fears, analysts say.
Bitcoin has fallen sharply from its record highs, and the decline has fueled several theories.
Many traders linked the drop to the recent US government shutdown. Others blamed concerns about the tech sector and the talk of an AI bubble. Analysts who follow Bitcoin’s long-term behaviour disagree.
They point instead to internal market factors and changing liquidity conditions.
Futures Leverage Drove The Drop More Than Any External Event
Rational Root, an onchain analyst, argued that the main driver behind the decline was the high level of futures leverage in the market.
He said this leverage build-up became unsustainable as Bitcoin pushed toward its all-time high near $125,100 in October.
He explained that traders kept adding leveraged long positions despite signs that the market was overheating. When price pressure increased, those positions unwound at a rapid pace.
That process caused moves that looked more dramatic than normal spot market trading. He made clear that the government shutdown did not play a meaningful role in this.
The analyst pointed out that similar resets have taken place several times during the past three years. Each of those moments removed excess leverage and cleared the way for later gains.
Analysts Also Reject Claims That AI Sector Worries Spilled Into Crypto
Some commentators suggested that fears about an AI bubble may have affected the crypto market. Victoria Scholar from Interactive Investor said that investors stepped back from speculative assets because of concerns about tech giants.
Analysts focused on Bitcoin disagree with that idea as well.
PlanC, who is known for his Bitcoin analysis, said the AI fear argument does not stand up to scrutiny. He pointed to Nvidia’s recent earnings, which came in far above expectations.
NVIDIA had very strong earnings.
We can remove the AI Bubble thesis from the list of reasons Bitcoin is down.
The list is getting smaller and smaller.
Only the 4-year cycle astrology narrative and delayed global liquidity remain.
Liquidity is coming.
And the 4-year…
— PlanC (@TheRealPlanC) November 20, 2025
Nvidia reported $57 billion in revenue for the quarter ending October 26. That figure beat Wall Street’s estimate of $54.7 billion. The company also reported year-over-year revenue growth of 62%.
PlanC said those results show that the AI sector is not facing the kind of pressure that would spill into the crypto market.
He added that as these theories fall away, only a few possible explanations remain.
Analysts Say Only A Few Real Factors Are Still In Play
PlanC said the remaining explanations are the four-year cycle theory and delayed global liquidity.
He noted that even the cycle theory is losing influence as market structure changes. The old cycle pattern has been part of Bitcoin’s history for more than a decade, but several analysts think it may no longer apply.
Cory Klippsten, CEO of Swan Bitcoin said the cycle framework may have ended because of growing institutional participation.
Heavy involvement from large firms changes how Bitcoin behaves across long periods. He believes that the previous cycle structure may never return.
Analysts also mentioned that global liquidity continues to be suppressed. Many Bitcoin observers use the M2 money supply as a gauge for liquidity conditions. Strike CEO Jack Mallers said Bitcoin reacts faster to liquidity changes than most assets.
He called Bitcoin “sensitive to liquidity” and argued that it moves before other markets during changes in money supply.
Related Reading: Bitcoin’s Cycle Echoes Past as Price Holds Fibonacci Key
Why Analysts Believe The Market Needed A Reset
Rational Root said the pullback gave Bitcoin a fresh start. He described the drop as part of a normal reset, not a sign of a deeper structural problem.
He also said Bitcoin experienced similar resets three times in the past three years. Each of those periods cleared excess leverage and prepared the market for more stable advances.
He expects any future move higher to unfold at a steadier pace.
He said earlier surges relied on heavy speculative positioning and resetting those positions reduces the chance of extreme swings.
Analysts also noted that Bitcoin usually benefits once leverage returns to neutral levels.