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Bitcoin has regained momentum after a volatile start to the week, surging back above $106,000 amid renewed optimism over a possible resolution to the U.S. government shutdown. Hints of a $2,000 “tariff dividend” from President Trump and stabilizing technical indicators have strengthened investor sentiment, signaling potential upside after a sharp correction.
Bitcoin Bounces Back After Sharp Decline
Bitcoin’s price faced heavy pressure earlier in the week, briefly dipping below the $100,000 mark for the first time in weeks. The leading cryptocurrency dropped nearly 10% as risk-off sentiment swept through both crypto and traditional markets. However, a strong weekend rebound erased most losses, with Bitcoin closing the week down just 4.99%, a modest outcome considering the volatility.
According to market data, the rebound was largely driven by expectations that U.S. lawmakers were close to ending the prolonged shutdown that has disrupted government spending and dampened liquidity across markets. Bitcoin’s recovery to $106K reflects the market’s belief that an end to the fiscal gridlock could restore confidence in growth-linked assets, including cryptocurrencies.
AI Stock Sell-Off Triggers Market-Wide Correction
The midweek slump originated in the stock market after reports emerged that investor Michael Burry, famous for his “Big Short” bet in 2008, had taken a $1.2 billion short position against major AI companies like Nvidia (NVDA) and Palantir (PLTR). The news sparked panic selling across tech-heavy indices, dragging the Nasdaq lower and spilling over into the crypto sector.
While the AI sell-off was unrelated to Bitcoin’s fundamentals, the broader risk aversion led to an accelerated pullback in digital assets. Bitcoin fell around 5% in a single day, while altcoins like Ethereum and Solana experienced even steeper declines as institutional traders exited positions amid tightening liquidity.
365-Day Moving Average Holds as Critical Support
Despite the sharp correction, Bitcoin managed to hold its 365-day moving average (MA) — a key long-term support indicator closely watched by traders. Analysts had warned that a break below this level could confirm a bearish reversal, but Bitcoin’s resilience above the MA line reassured investors.
This technical strength mirrors previous recoveries during major crises, including the April 2025 tariff dispute and the August 2024 yen carry-trade unwind, both of which saw Bitcoin rebound sharply after testing its long-term support.
Ethereum (ETH) followed a similar trajectory, recovering from a midweek low of $3,100 to finish above $3,600 by Sunday, although still down around 6.5% for the week.
Shutdown Resolution Fuels Market Optimism
The ongoing U.S. government shutdown, which has furloughed over 750,000 federal employees and disrupted essential services, has been a major source of market tension. Investors and analysts alike believe that reopening the government would inject much-needed liquidity into the financial system, benefiting both equities and cryptocurrencies.
Economist Raoul Pal, founder of RealVision, noted that fiscal paralysis has worsened liquidity constraints, particularly for digital assets. He described the potential reopening as a “powerful bullish catalyst” capable of reversing the market’s bearish tone.
This optimism gained traction over the weekend when Senate Majority Leader John Thune suggested that lawmakers were nearing an agreement to end the shutdown. The comment caused a sudden shift in prediction markets — with betting odds moving the expected end date from November 20 to November 11 — and helped propel Bitcoin from $103K to over $105K within hours.
Trump’s $2,000 Dividend Proposal Adds Momentum
Adding to the positive sentiment, President Donald Trump took to social media to propose a “tariff dividend” of $2,000 per person, excluding high-income earners. In his post, Trump argued that tariff proceeds should directly benefit ordinary Americans, calling critics of tariffs “fools.”
Markets quickly reacted to the announcement, interpreting it as a potential form of fiscal stimulus. Traders speculated that such direct payments could find their way into risk assets, including cryptocurrencies. The reaction was immediate — Bitcoin jumped more than $2,000, climbing from $103K to $105K shortly after the post.
What’s Next for Bitcoin and Global Markets
Looking ahead, all eyes are on Congress, where lawmakers are set to vote on the proposed shutdown resolution early this week. A successful passage could sustain Bitcoin’s bullish momentum and push prices higher toward the $108K–$110K range.
However, traders remain cautious about potential volatility tied to Federal Reserve speakers scheduled later in the week. With macroeconomic data releases delayed due to the shutdown, market sentiment will likely hinge on political developments and broader risk appetite.
For now, Bitcoin’s ability to defend its 365-day MA and recover above $106K highlights renewed investor confidence — but the next move will depend heavily on Washington’s ability to deliver a lasting fiscal resolution.
