Bitcoin has fallen below the $90,000 mark, and despite a slight rebound today, technical indicators suggest no clear stabilization trend, according to Jeffrey Ding, Chief Analyst at HashKey Group. The cryptocurrency has dropped from $120,000 to below $90,000 in just over a month, primarily due to emerging concerns over a potential U.S. dollar liquidity crisis.

Ding reiterated his core thesis: Bitcoin's price serves as an early indicator of global dollar liquidity, with the Federal Reserve and the U.S. Treasury acting as the central "organs" of monetary circulation. The primary driver of the current crisis is the Fed's decision to extend its quantitative tightening (QT) policy until early December. A secondary factor is the month-long U.S. government shutdown, which led to a surge in the Treasury General Account (TGA) cash balance, draining market liquidity.

However, the Fed has paused balance sheet reduction, which should gradually improve liquidity conditions in early December. Meanwhile, the reopening of the U.S. government will normalize TGA flows.

Additional non-core factors have also shaken market confidence, including geopolitical tensions in East Asia, high leverage in crypto markets, and premature expectations of Fed rate cuts. While Japan's new prime minister has introduced market uncertainty with hawkish rhetoric, the impact on digital assets remains limited. Crypto leverage, which peaked at $230 billion, has since declined by nearly 45% to $130 billion, indicating a market deleveraging process. Speculation about a December Fed rate cut has stirred investor sentiment, but its actual impact on capital flows is minimal—though further easing in 2025 remains likely.

Ding emphasized that the liquidity crisis has not yet fully materialized, making the Fed and Treasury's next moves critical. Key questions include whether the Fed will expand its reserve assets and whether the Treasury will steadily reduce its TGA balance. Any disruption in these "lifelines" could trigger another liquidity crunch.