Observing Market Signals: Why Bitcoin Continues to Retract

I have been closely monitoring the cryptocurrency markets for several years, and the pattern we see now truly stands out from previous cycles. Bitcoin is experiencing a retracement that has lasted four consecutive months—a scenario not seen since 2018. After analyzing the available data, the answer to this prolonged decline goes beyond the superficial narratives circulating.

The core issue revealing the true dynamics of the moment is simple but profound: we are facing a structural liquidity problem in global markets.

The $300 Billion Global Liquidity Drain

Analysts like Arthur Hayes recently explained a crucial phenomenon that is directly affecting digital assets. Approximately $300 billion in liquidity has disappeared from the market in just a few weeks. Most of this capital did not circulate; it was directed to a specific place: the US Treasury General Account increased by $200 billion.

This movement signals something important. The government is rapidly accumulating cash reserves, a pattern that typically precedes periods of fiscal uncertainty or potential operational disruptions. When the Treasury drains its balances, Bitcoin historically experiences recoveries. When the Treasury accumulates funds, the opposite occurs: liquidity is withdrawn from the market, and risk assets, including cryptocurrencies, face immediate pressure.

Banking System Pressure: The Warning Signal

A recent event reinforces this analysis: Chicago’s Metropolitan Capital Bank shut down its operations, marking the first bank failure in the US in 2026. This event is not isolated but a visible symptom of a much broader liquidity crisis unfolding globally.

When banking institutions face difficulties, they reduce credit supply and capital mobility. The correlation between banking problems and cryptocurrency performance is clear and consistent: when banks struggle, investors tend to move away from speculative assets, including Bitcoin and other cryptocurrencies that are sensitive to changes in liquidity availability.

Political Uncertainty and Market Risk

The current macroeconomic scenario is tense. The US government shutdown is underway, with impasses over funding critical agencies like ICE (Immigration and Customs Enforcement). This political uncertainty quickly translates into risk-off behavior in financial markets.

Bitcoin, classified as a risk asset, experiences capital outflows when uncertainty rises. Investors move away from speculative investments and seek refuge in safer assets. The speed of this portfolio reallocation is intriguing: this time, the shift in sentiment is happening faster than in previous cycles.

The Campaign Against Stablecoin Yields

Another pressure factor emerges from lobbying against stablecoins. Community banks have launched an aggressive advertising campaign, claiming that the yields offered by stablecoins could divert $6 trillion from the traditional banking system, harming small businesses and local credit institutions.

Coinbase CEO Brian Armstrong has become a direct target of this effort. The Wall Street Journal described him as “the number one enemy” of the traditional financial establishment. His “crime”? Offering consumers financial products with better returns than traditional banks can compete with.

The true agenda here is clear: banks want to preserve their monopoly over financial services and are unwilling to accept genuine competition in the yield market. This political and regulatory pressure adds another layer of uncertainty to the cryptocurrency market, further deterring less convinced investors.

The Convergence of Factors

Looking at all these elements together, Bitcoin’s decline is not the result of a single factor but a convergence of pressures: reduced global liquidity, banking stress, political uncertainty, and coordinated regulatory pressure. When these factors align, the impact on Bitcoin is immediate and significant.