Bitcoin plunged below $70,000 on Thursday, and the world's largest cryptocurrency's decline showed no signs of stopping, Reuters reports, writes UNN.
Details
Bitcoin fell 3.8% to a low of $69,858, its lowest level since November 2024, when Republican Donald Trump won the US presidential election, stating his intention to support cryptocurrencies during his campaign.
Over the week, Bitcoin has already fallen by almost 8%, bringing its year-to-date losses to almost 20%. Ether, which fell almost 2% to $2,090, is down almost 30% year-to-date.
The latest sharp cryptocurrency crash, attributed by analysts to Kevin Warsh's nomination as Federal Reserve chairman, due to expectations that he might reduce the Fed's balance sheet.
Cryptocurrencies are widely seen as beneficiaries of a large balance sheet, as they typically rose when the Fed fueled money markets with liquidity — support for speculative assets, the publication writes.
"The market fears a hawk from his side," said Manuel Villegas Franceschi of the next-generation research team at Julius Baer. "A smaller balance sheet will not provide any support for cryptocurrencies."
According to CoinGecko, the global cryptocurrency market has lost almost $1.9 trillion since peaking at $4.379 trillion in early October, with about $800 billion lost in the last month alone. Cryptocurrencies have been struggling for several months after a record crash last October, when Bitcoin fell from its peak amid a loss of leveraged positions, the publication indicates.
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This has reduced investor interest in digital assets and made attitudes towards the industry unstable.
"We believe this broader decline is mainly driven by massive outflows from institutional ETFs. Since the downturn in October 2025, billions of dollars have flowed out of these funds every month," Deutsche Bank analysts said in a client note.
They added that US spot Bitcoin ETFs saw outflows of over $3 billion in January, following outflows of about $2 billion and $7 billion in December and November, respectively.
"In our view, this sustained sell-off indicates that traditional investors are losing interest, and overall pessimism about cryptocurrencies is growing," the analysts said.
Bitcoin's fate has been linked to the broader technology sector for some time. The price has tended to rise, especially amid investor enthusiasm for artificial intelligence.
The collapse of global software companies' stocks this week accelerated the decline in the value of Bitcoin, Ether, and other tokens.
Market observers are beginning to wonder if this decline is the beginning of a sharper correction.
"Concerns are emerging about crypto miners and whether we could see forced liquidations if prices continue to fall, which could lead to a vicious cycle," Jefferies strategist Mohit Kumar said in a note.
"Our view on cryptocurrency has always been that it should not constitute more than a very small part of a total portfolio. However, it is also an asset class that is widely owned, especially by retail investors, and therefore increases overall market risk," he pointed out.
Crypto traders prepare for Bitcoin to fall below $65,00005.02.26, 03:45 • [views_3754]