Bitcoin experienced a significant decline, falling below the $81,000 support level on Thursday, leading to $489 million in forced liquidations within just one hour. This downturn was driven by various factors, including government asset transfers, rising geopolitical tensions, and a stance from the Federal Reserve suggesting further tightening of monetary policy, all of which have rattled the cryptocurrency markets.
According to TradingView data, Bitcoin dropped to approximately $81,000 on Bitstamp, marking its lowest point since September 21. The failure to maintain the $82,500 support level, which had been stable for the previous month, is attributed to three main catalysts: a $1.01 billion Bitcoin transfer linked to U.S. government seizure wallets, reports that the White House is considering military action against Iran before the midterm elections, and Federal Reserve meeting minutes indicating another interest rate hike might be on the horizon.
Data from Arkham revealed that U.S. government wallets transferred 12,267 BTC from a seizure wallet related to a Bitfinex hack to new, unidentified addresses. This transaction did not involve any deposits to exchanges, indicating wallet restructuring rather than an outright sell-off, although it followed a day of heavy exchange activity. Approximately 3,200 BTC valued at around $264 million, along with $119 million in USDT, were moved to Coinbase Prime deposit addresses from wallets associated with FTX/Alameda and Bitfinex seizures.
The swift movement of these large amounts raised concerns regarding potential selling pressure. Prediction market Kalshi Crypto announced on X that traders anticipate Bitcoin may plunge to $78,000 later this month following the transfer.
Geopolitical Tensions and Rising Yields
The cryptocurrency selloff coincided with a broader cautious sentiment fueled by climbing oil prices and increasing pressure on long-term U.S. interest rates. The Atlantic reported that the White House has requested the Pentagon to prepare strike options against Iran that could be executed prior to the November 3 midterm elections. U.S. Central Command is in the planning stages, though officials have warned that limited strikes won’t necessarily ensure safe navigation through the Strait of Hormuz or reduce gas prices before the elections.
The yield on 30-year U.S. Treasuries reached a new 24-year high of 5.73% before pulling back to around 5.65%, amplifying fears that rates may remain elevated for an extended period. The 10-year yield hit 5.36%, marking its highest point since 2002.
According to CME Group’s FedWatch Tool, expectations regarding the Federal Reserve have shifted further in favor of a 0.25% rate increase in December, with the likelihood surpassing 70% by Thursday. The minutes from the Federal Reserve’s recent meeting indicated that officials anticipate another rate hike before the year’s end to manage inflation, which has surpassed the target for over five years. The Fed’s preferred inflation indicator revealed the core PCE at 3% for August, still above the 2% goal.
In a speech at a Central Bank of Turkey forum in Istanbul, Fed Governor Christopher Waller noted that if economic data continues to align with expectations, additional rate hikes may be necessary to return inflation to the 2% target. He clarified that while hikes don’t need to occur in consecutive meetings, they should happen within a reasonable timeframe.
Technical Breakdown and Altcoin Declines
Bitcoin’s value fell below its 20-day exponential moving average of $83,263, yet remained above its 50-day, 100-day, and 200-day EMAs, indicating that the overall upward trend is technically still intact. Analysts had previously identified the $82,500 mark as a crucial support level, with trader and analyst Rekt Capital stating it’s pivotal for determining the future structure of the market.
XRP was among the most affected cryptocurrencies, declining by 6% after falling below its 20-day EMA and the rising trendline from August’s low. Its relative strength index dropped to 38.07, nearing oversold conditions. Ethereum also decreased by 6%, and Dogecoin fell 7% in the same market downturn. Solana saw a decline of 2.5%, dropping below $115.
The total cryptocurrency market cap dipped by 1.25%, settling around $2.8 trillion, with CoinGlass data revealing approximately $430 million in long liquidations across various cryptocurrencies at the time of writing. This came on the heels of over $600 million lost in crypto positions during the previous trading session. Bitcoin spot ETFs experienced outflows of $487 million on Wednesday, while Ethereum spot ETFs saw $160 million exiting, as reported by SoSoValue data.
Crypto-related stocks also faced downward pressure. Strategy (MSTR) remained unchanged in early trading, while Coinbase (COIN) dropped 0.3% and Circle (CRCL) decreased by 0.4%.
Wall Street’s Split on Treasury Forecasts
The sharp rise in Treasury yields has created a division among Wall Street experts regarding whether the current bond market selloff has peaked or still has room to fall. Goldman Sachs anticipates the 10-year yield will decline to 4.75% by year-end, a drop of nearly 60 basis points from Wednesday’s high. William Marshall, Goldman’s head of U.S. rates strategy, noted that underlying inflation pressures appear to be “reasonably well contained,” suggesting that the recent high inflation is driven by factors such as tariffs and the Iran situation that should ease in time.
Conversely, Barclays has raised its forecast for the 10-year yield to 5.25% for the third quarter of 2027, warning that the 30-year yield could reach 6%. Anshul Pradhan, Barclays Capital’s head of U.S. rates research, highlighted that as long as the U.S. economy remains strong, there’s no specific trigger to push yields below 5% in the near future.
Morgan Stanley expects the 10-year yield to drop to 4.8% by year-end, with rates strategist Martin Tobias suggesting that the market has already factored in a more hawkish outlook than their economists predict. JPMorgan forecasts the 10-year yield to end the year at 5.05%, indicating its return to fair value for the first time in six months.
An encouraging sign emerged from the October 7 Treasury auction, where the $39 billion sale of 10-year notes attracted a bid-to-cover ratio of 2.77, the highest since 2016. Non-dealer investors accounted for a record 97.5% of the issue, indicating that significant investors are beginning to re-enter the market as yields rise to levels not seen in decades.
Some bond investors are adopting a more positive outlook. Vishal Khanduja from Morgan Stanley Investment Management shared that he has turned bullish on Treasuries for the first time in ten years, noting that current elevated yields provide sufficient interest income to buffer against further price declines as higher borrowing costs begin to exert pressure on delicate segments of the global economy. “Over the next year, my confidence is very, very high,” he stated.
The interplay between inflation fears driven by crude oil prices and volatility in long-term yields is significant for cryptocurrency traders, as it can rapidly adjust the discount rates applied to speculative assets. When yields spike, liquidity tends to become more selective, and asset prices react more swiftly—particularly for cryptocurrencies like Bitcoin that often trade in correlation with macroeconomic trends.
As Bitcoin hovers near the $82,500 threshold and macroeconomic factors continue to influence trading, traders are likely to seek confirmation: either a sustained recovery above this level or further downward movement that compels the market to reassess its support zones. The critical question remains whether the current market pressure represents a transient shock or signals the beginning of a more profound shift in risk pricing.