Bitcoin was heavily sold on Wednesday, dropping more than 6% in 24 hours and briefly falling to the low $83,000. The decline happened quickly at the end of the session and easily broke through intra-day support levels, without finding immediate buyers.
This price movement is due to the convergence of three major macro risks: rising tensions between the US and Iran, increasing concerns about a possible US government shutdown, and a harsh winter causing infrastructure problems across North America.
The geopolitical risk resurfaced after Washington issued new warnings to Tehran and Iran indicated it was ready to respond forcefully to any military escalation.
Marine movements in the Middle East and new sanctions threats raise extra concerns about misunderstandings and mistakes, especially as diplomatic relations remain tense.
Markets usually see the beginning of geopolitical escalation as a signal to avoid risks rather than as protection.
For Bitcoin, this often means that risks are reduced in the short term, especially when many positions are leveraged and liquidity is low.
At the same time, investors are increasingly counting on a U.S. government shutdown as negotiations over finances stall just before a crucial deadline.
Without a last-minute agreement, various federal agencies may face issues, causing delays in payments and decreasing financial clarity.
Historically, the Bitcoin price has dropped sharply during the previous three shutdowns, sometimes by as much as 16%.
In practice, traders first reduce their positions and look again later, especially in markets that already show signs of weak demand.
A heavy winter storm continues to disrupt large parts of the U.S. and Canada. This leads to power outages, transport delays, and pressure on infrastructure.
Weather extremes are usually not a direct driver for Bitcoin, but they amplify risk aversion when they occur alongside geopolitical and financial stress.
In this case, the storm is primarily an exacerbating factor that strengthens the cautious mood among investors, without directly affecting the Bitcoin network or mining activity.
Price action signals forced selling
The intra-day chart of Bitcoin shows a gradual decline followed by a sharp drop at the end of the session. The lack of a strong recovery indicates that this movement primarily resulted from forced adjustments and not from voluntary sales, such as liquidations and stop-losses.
This type of price behavior is often seen when liquidity is too low to absorb sudden selling pressure, which closely relates to declining spot demand.
One of the major structural shifts is seen in U.S. spot Bitcoin ETF inflows. Year-to-date, the ETFs have net sold approximately 4,600 BTC, while in the same period last year nearly 40,000 BTC net flowed in.
This difference is important, as ETFs provided the most stable demand for spot Bitcoin this year.
If this demand decreases, it remains difficult to sustain rallies and declines become more severe, as there are fewer buyers to absorb the selling.
Decline in retail demand undermines market stability
On-chain data tracking transactions between $0 and $10,000 shows that retail demand has strongly decreased over the past month. This means not only less position building but also less participation from smaller investors.
The market can temporarily absorb this, but if retail demand disappears for an extended period, a key stabilizing force also vanishes.
Due to the combination with ETF outflows, the market is becoming increasingly reliant on short-term traders and leverage, both of which increase volatility.
Despite the selling wave, the Bitcoin supply-in-loss metric remains relatively low compared to previous periods. This means that the majority of holders still have unrealized profits, a situation that often precedes further declines rather than reaching a bottom.
When the price drops to zones where more supply suffers loss, selling pressure can accelerate as sentiment shifts and risk tolerance decreases.
Do these events cause the selling wave: or do they show weakness?
The data points to the latter. Tensions between the U.S. and Iran and fears of a shutdown likely acted as catalysts, accelerating risk reduction. However, ETF outflows and declining retail demand show that the market was already vulnerable.
Instead of causing new weakness, macro shocks reveal a structural vulnerability that has already been building beneath the surface.
What the charts suggest for the upcoming week
If demand remains the same, Bitcoin may continue to experience erratic price movements and weak increases. Any recovery can only persist if supported by improving ETF inflows or stabilization of retail demand.
If the price drops below the recent lows, it could trigger another wave of forced selling.
At this moment, the path of Bitcoin seems less dependent on news and more on whether underlying demand returns before volatility causes a new price correction.