“At the same time, tighter financial conditions and rising concerns about credit risk have pushed investors out of higher-beta assets, and crypto is feeling that rotation immediately.”

“The combination of weaker liquidity, derisking by institutions, and long-term holders taking profit has accelerated the move lower,” said DiPasquale.

Maja Vujinovic, CEO and cofounder of Digital Assets at FG Nexus, also commented on the weakening conditions in the cryptocurrency markets.

“Bitcoin’s slide is driven by a convergence of macro and market structure factors,” she stated through email. “We’ve moved into a clear risk-off environment, tech, growth, and high-beta assets all sold off as investors priced in higher-for-longer interest rates.”

“In turn, that shift pulled capital out of the Bitcoin ETFs, where hedge funds and fast-money allocators were taking profits after a massive run-up,” the analyst continued.

Julio Moreno, head of research for CryptoQuant, also weighed in, speaking to falling demand.

“I think this is a follow up price correction happening in the context of broad bearish conditions in crypto markets,” he said via Telegram when asked what was driving bitcoin’s most recent declines.

“Specifically, the demand for Bitcoin and crypto assets from US investors have been contracting, as seen by negative flows of ETFS and a negative Bitcoin Coinbase price premium,” Moreno added.

Credit Risks

One analyst took a broader view, emphasizing bitcoin’s recent correlation to risk assets and voicing concerns about the credit markets.

“Bitcoin and Crypto in general have become very correlated to ‘risk-assets’ as of late,” Greg Magadini, director of derivatives for digital asset data provider Amberdata claimed via email.

“Today the market is beginning to reflect nervousness around credit. Almost all western governments are running large spending deficits on top of already large debt burdens while the stock market is being led higher by AI related stocks,” he added, pointing out what he views as potential risks.

“Something like 40% of the S&P-500 has exposure to AI in some form,” Magadini continued. “This becomes a problem if the AI driven growth needs to be financed through large credit issuances to finance future CapEx, ahead of meaningful organic revenue.”

The derivatives expert was not alone in highlighting AI as a potential threat to assets like stocks and cryptocurrencies, as David Brickell, head of international distribution for FRNT, stated via Telegram that “Broader risk assets are also under pressure amid concern over an AI-driven tech bubble.”

Brickell also offered an outlook on liquidity, stating that “With the government shutdown resolved, liquidity should gradually return as the Treasury General Account is spent down, but ahead of major U.S. data releases, markets remain cautious and defensive.”