Bitcoin (BTC) is having a rough week. Actually, make that a rough month. The cryptocurrency has dropped 22% from its early October peak, and on Friday it touched $94,700, its lowest level in six months. The optimism from earlier this year is starting to feel like a distant memory.

So what's driving this sell-off? Three things, mostly.

First, Bitcoin is caught up in a broader flight from risk assets. Tech stocks are getting hammered as investors worry about stretched valuations, and crypto is following right along. On Thursday, spot bitcoin ETFs hemorrhaged $866.7 million in outflows, according to CoinGlass data. That's the worst single day since early August, which tells you something about how quickly sentiment has soured.

Second, liquidity has dried up significantly over the past month, making price swings more dramatic. Crypto analytics firm Kaiko notes that Bitcoin's market depth, which measures how much the price can withstand large trades without going haywire, fell from around $766 million in early October to just $535.2 million this week. Less liquidity means bigger moves on smaller volumes, which is exactly what we're seeing.

Third, rumors started flying that Strategy, the largest corporate holder of Bitcoin, had dumped some of its stash. That kind of speculation can move markets fast, especially when everyone's already nervous.

Michael Saylor, Strategy's founder, quickly pushed back against the rumors, insisting the company was actually buying more Bitcoin, not selling. But the market didn't exactly breathe a sigh of relief. Strategy's net asset value premium fell below 1x this week, meaning the premium it typically commands over the value of its Bitcoin holdings has temporarily disappeared. Investors are clearly still skeptical.

The bigger picture here is that Bitcoin remains incredibly sensitive to broader market sentiment. When risk appetite fades, crypto tends to get hit hard. Combine that with thinner liquidity and swirling rumors about major holders, and you get the kind of volatility we're seeing now. The market will keep watching Strategy's moves closely, but for now, Bitcoin's outlook remains murky.