Bitaigen Research We have examined the fundamental drivers behind the recent sharp decline in Bitcoin from both macro‑ and micro‑level perspectives, focusing on the interplay among five major factors: deleveraging, the pull‑back of the AI boom, regulatory developments, quantum‑computing concerns, and the four‑year cyclical psychology. By contrasting data and case studies, we aim to clarify the evolution of market sentiment. Subsequent sections will further uncover the mechanisms behind each factor and possible forward‑looking scenarios, so a careful read is recommended. *(For fiat on‑ramps, global users typically transact in USD via SEPA or SWIFT; U.S. residents should use Binance.US.)*
Summary
- Over the past seven days, Bitcoin has fallen roughly 19 %, dipping below the $60,000 mark.
- Open‑interest on Bitcoin futures dropped sharply from $61 billion to $49 billion.
- The primary catalyst for this sell‑off is broad‑based deleveraging rather than a single liquidation event.
Massive Deleveraging
Data from Coinglass indicate that Bitcoin futures open‑interest fell from about $61 billion to roughly $49 billion within a week, meaning leveraged capital contracted by more than 20 %.
Open‑interest reflects the amount of borrowed money being used in the Bitcoin price game and can serve as a gauge of whether the market is leaning toward aggression or risk avoidance. It is worth noting that in early October this metric peaked at $90 billion, and the current level is more than 45 % below that high.
The simultaneous decline in price and leverage suggests a coordinated down‑trend rather than a crash triggered by forced liquidations. Coinglass statistics show that total market liquidations over the past week amounted to about $3‑4 billion, with roughly $2‑2.5 billion concentrated in Bitcoin futures.
Pull‑Back of the AI Boom
Matthew Sigel, Head of Digital Asset Research at VanEck, argues that the market has grown skeptical about the profit outlook of AI companies such as OpenAI and major cloud providers. Massive infrastructure spending has yet to produce clear returns, and monetisation models remain vague; this uncertainty hits mining firms especially hard.
Many mining operations have tried to pivot hash power toward AI and high‑performance computing in hopes of capturing new revenue streams. However, with financing channels tightening and Bitcoin prices sliding, miners are forced to sell Bitcoin to keep cash flowing. Sigel writes: “A softer Bitcoin price and a tighter funding environment compel miners in a fragile market to off‑load spot Bitcoin, further increasing supply pressure.”
Coincidentally, some miners are liquidating Bitcoin to fund AI projects whose prospects are becoming increasingly unstable.
Governance Transparency Under Scrutiny Again
The “World Liberty Finance” project, linked to the Trump family, recently transferred a large block of shares to investors with connections to the United Arab Emirates, raising concerns about transparency in the crypto space. According to a Wall Street Journal report dated January 31, the project sold nearly half of its equity to members of the Abu Dhabi royal family for an undisclosed $500 million price tag around the time former President Trump assumed office in January 2025.
Sigel points out that this is precisely the type of uncertainty the Transparency Act aims to mitigate by standardising disclosure requirements, thereby bolstering market confidence.
Quantum‑Computing Risk Heating Up
Discussion about quantum computers potentially breaking Bitcoin’s cryptographic algorithms has intensified lately. Although some core developers downplay the immediacy of the threat, investor interest in the topic is on the rise. A report from Chaincode Labs estimates that 20 %‑50 % of Bitcoin in circulation could be vulnerable to a quantum attack.
Ironically, stocks of companies involved in quantum‑computing have also suffered steep declines, mirroring the bearish trajectory of Bitcoin and other risk assets.
Psychological Factors of the Four‑Year Cycle
Bitcoin’s price action often revolves around an unofficial four‑year cycle tied to the halving event. Halvings cut the rate of new coin issuance and have historically been followed by price appreciation; subsequent profit‑taking then creates selling pressure, ushering in a correction phase.
Sigel explains: “The four‑year narrative remains a key reference point for investor sentiment.” Yet history shows that the path from peak to trough is rarely linear, frequently accompanied by a wave of new buyers entering after a crash; those fresh inflows have supported later rebounds. Some observers even argue that the current four‑year cycle may be winding down.
Conclusion
Although the five adverse factors outlined above intertwine to produce the recent pronounced Bitcoin decline, Sigel still views the situation as an opportunity to build positions with a one‑to‑two‑year horizon. As he puts it, “The depth of the pull‑back and the reset of leverage make the current price more attractive for long‑term allocation.”
For a deeper dive into Bitcoin’s price dynamics, continue exploring past articles from Bitaigen (比特根) or follow the related links below. We hope you keep following and supporting Bitaigen!
*Please be aware that cryptocurrency gains may be subject to tax in your local jurisdiction.*
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