Bitcoin (BTC) experienced a significant drop on Thursday, trading around $65,645 after once again failing to breach the critical $70,000 resistance level. This decline is not isolated; it has triggered a similar downturn across the broader cryptocurrency market, impacting major tokens such as Ethereum (ETH), XRP, and Solana (SOL).
Market analyst Ash Crypto identified two main factors driving this latest selloff: deteriorating economic indicators from the United States and the increasing likelihood of a federal government shutdown. In a post shared on X, he highlighted concerning macroeconomic data, including an 8.4% drop in US home sales, the largest decline in nearly four years, and higher-than-expected initial jobless claims that signal potential weaknesses in the labor market.
These developments suggest that the US economy may be losing momentum, raising fears of a forthcoming recession. Compounding these worries is the heightened risk of a government shutdown, with Ash estimating a 96% probability of such an event occurring this week. A shutdown would likely have detrimental effects on both traditional financial markets and cryptocurrencies by tightening liquidity conditions.
Ash expressed that the US economy is entering a turbulent phase, which is already manifesting in declines across equities, Bitcoin, and other digital assets. He believes that market weakness may continue until a positive catalyst emerges, such as a new trade agreement or an injection of liquidity.
Technical analyst Crypto Rover echoed these sentiments, warning that the “biggest threat to markets” has resurfaced. He characterized the potential government shutdown as a severe liquidity risk for financial markets. Another complicating factor is the recent increase in the US debt ceiling to $41.1 trillion. While this move prevents an immediate default, it provides lawmakers with more latitude to extend negotiations without halting government functions.
Rover pointed out that this flexibility could paradoxically increase the chances of a prolonged shutdown, as neither party faces immediate financial pressure to reach a compromise. He also noted weakening labor market conditions, a slowdown in retail spending, and an uptick in corporate bankruptcies as indicators that the economic landscape is deteriorating.
Ultimately, should a government shutdown occur and extend over time, Rover warns that the liquidity drain could intensify significantly, placing additional pressure on both equities and cryptocurrencies like Bitcoin.
In summary, as Bitcoin hovers around $65,645, market participants should remain vigilant of the broader economic implications stemming from US economic data and political uncertainties.
