Bitcoin fell approximately $7,000 in three days this week, declining from near $87,000 to $80,400 on Thursday evening. The pullback reversed analyst expectations for continued gains and raised questions about the strength of the current market rally.
Government Transfers Trigger Initial Decline
The sharp move began Wednesday morning with a $2,000 drop within 20 minutes. On-chain tracking firm Lookonchain attributed the decline to US government crypto holdings transfers to Coinbase Prime. Over a 72-hour period, the government deposited approximately 17,733 BTC and 750 WBTC into the exchange, totaling roughly $1.5 billion in bitcoin and $62 million in WBTC.
ETF Outflows and Selling Pressure
Bitcoin spot ETFs experienced significant net outflows this week after sustained inflows during August and September. October 7 and 8 saw particularly heavy outflows of $487 million and $244 million, respectively, according to fund tracking data.
Selling pressure also came from miners. Marathon Digital Holdings disposed of 996 BTC worth over $81 million on October 8. Additionally, traders secured over $1 billion in profits, marking Bitcoin's second-highest realized profit day of 2026. Data provider Santiment noted that such profit-taking spikes typically coincide with short- to mid-term market cooling periods.
Macro Factors Weigh on Risk Assets
Geopolitical tensions contributed to the decline. US President Donald Trump's earlier hints about potential military action against Iran, combined with security meetings at Camp David, elevated market uncertainty before Trump later reassured that no attack would occur before November midterm elections.
Federal Reserve Governor Christopher Waller also signaled additional rate increases may be needed to reach the central bank's 2% inflation target, though he noted flexibility on the pace of hikes. Such comments typically pressure risk-on assets like Bitcoin.
Correction or Reversal
Some analysts characterized the decline as a routine correction within a bull market rather than a fundamental shift. CryptoQuant CEO Ki Young Ju stated that Bitcoin remains in an early bull phase and cautioned against confusing bull market corrections with bear market reversals.
