Bitcoin is plunging.

After hitting $126,210 last month, it’s now hovering around $86,000.

So is this just a normal correction or something worse?

The reality is simpler than the headlines make it seem.

This isn’t the end of Bitcoin.

It’s a temporary shakeout driven by a few key factors, and understanding them shows exactly why the market is jittery right now.

Reason #1: Investors are Rushing to “Safety”

Bitcoin doesn’t trade in a vacuum.

Its price has become increasingly tied to the broader financial markets, especially high-growth tech stocks.

When investors feel confident and are willing to take on risk, both tech and Bitcoin tend to climb.

When nerves set in, these are among the first assets they dump.

That’s exactly what we’re seeing now – a broad risk-off shift across markets.

The biggest trigger has been the sudden weakness in the artificial-intelligence trade.

After years of explosive gains in anything tied to AI, momentum is cooling and the “AI bubble” conversation is getting louder.

As that trade unwinds, the selling pressure spills over into other speculative corners of the market.

Bitcoin sits in the same risk bucket as high-growth tech, so it gets hit when investors de-risk.

In short, this isn’t a decline caused by Bitcoin itself.

It’s falling because the entire speculative complex is taking a breather.

Reason #2: The “Whales” Are Selling

Another large force behind Bitcoin’s drop is simple: Whales are selling.

In the cryptocurrency world, a "whale" is the term for an individual or entity that holds a large amount of Bitcoin.

Because they control such a vast supply, their trading decisions can significantly move the entire market.

Bitcoin transaction data makes this easy to spot.

The latest large move happened on Thursday, as analytics service Lookonchain flagged a massive transfer from a wallet belonging to Owen Gunden.

In the early hours of Thursday morning he moved 2,499 Bitcoin (worth roughly $228 million) to crypto exchange Kraken.

Large transfers like this to centralized exchanges often precede significant selling.

Since October 21st, Gunden has unloaded 11,000 Bitcoin worth about $1.3 billion.

This isn’t some influencer moving tokens around for attention. It’s a long-time holder liquidating an entire billion-dollar position.

And he’s not alone.

Other wallets holding 1,000 Bitcoin or more have also stepped up their selling.

They’re likely taking profits after years of gains, the same way they have in past cycles.

The difference this time is timing.

They’re selling into a market where sentiment is already deteriorating (Reason #1) and fresh buyers have slowed down.

Reason #3: The Domino Effect of Leveraged Trading Losses

The rapid nature of Bitcoin's fall is not just due to investors selling.

It’s heavily magnified by the mechanics of leveraged trading, which involves borrowing funds to place large bets.

Many professional and retail traders use leverage to multiply their potential returns.

If they believe the price will go up, they take a "long" position with borrowed money.

However, if the price moves against them, even by a small amount, they risk their entire position being wiped out in a process called liquidation.

When Bitcoin’s price began to drop from its recent highs, it triggered margin calls on these highly leveraged accounts.

To cover the losses and close the position, the exchanges automatically sell the trader’s Bitcoin holdings.

This forced selling adds massive, sudden supply to the market, which pushes the price down even further.

That lower price then triggers the liquidation of the next wave of leveraged accounts, and so on.

This self-reinforcing downward spiral is the reason why the dips often appear so violent.

So What Happens Next?

None of this changes my long-term view.

Bitcoin has been through far worse than a wave of whale selling or a temporary risk-off stretch.

Every cycle, the pattern is the same: it sells off hard, sentiment collapses, leverage gets flushed and then it recovers.

Not once in its history has Bitcoin failed to rebound after these shakeouts.

That’s why I continue to believe you should own it.

The short-term noise always fades. But the long-term trend has been remarkably consistent.