Bitcoin (BTC) is on track to record its fourth consecutive annual decline, a rare occurrence in its history. Unlike previous downturns, this drop isn’t linked to any major scandal or widespread collapse within the cryptocurrency sector.
Yesterday saw a sharp sell-off in Bitcoin’s value, with losses reaching up to 5.2% during the trading day. Year-to-date, Bitcoin has fallen by roughly 7%.
Although this decrease is less severe than the dramatic crashes witnessed during the past three losing years, it unfolds under markedly different circumstances. Since the significant crypto market crash of 2022, institutional interest has grown substantially; regulatory frameworks have become more robust; and notably, former US President Donald Trump has publicly endorsed the sector. Despite these positive developments, Bitcoin’s swift retreat from its peak above $126,000 in early October caught many investors off guard.
Trading activity remains subdued as investors continue withdrawing from Bitcoin ETFs and derivatives markets show limited enthusiasm for a price recovery. Even substantial acquisitions by Michael Saylor’s firm Strategy (previously MicroStrategy) failed to halt downward pressure on prices. Pratik Kala, portfolio manager at Apollo Crypto, remarked that “the absence of strong follow-through despite numerous favorable catalysts has taken many by surprise.”
The current scenario also highlights Bitcoin’s growing divergence from traditional equities markets. While the S&P 500 recently reached an all-time closing high and boasts a year-to-date gain of about 16%, technology stocks—often correlated with Bitcoin—have outperformed even more impressively.
Historically, each of Bitcoin’s three major declines was triggered by significant events undermining investor confidence: In 2014,the Mt.Gox exchange hack led to a staggering 58% loss; in2018,the ICO bubble burst combined with increased regulatory scrutiny causeda74% plunge;andin2022,several prominent firms including FTX collapsed,resultinginheightenedregulatorypressureintheUSmarket.
Before peaking last October,BTC appeared unstoppable amid optimistic headlines such as Trump declaring cryptocurrencies a national priority,the passageofhistoricstablecoinlegislationbyCongress,andmassivecapital inflowsintoBitcoinETFs.Yetbehindthescenes,vulnerabilitiesmountedparticularlydueexcessiveleverage.OnOctober10th,a$19billionliquidationeventrevealedtheseweaknesses,severelyrockingthemarket.
Kala further explained,“Selling pressurefromlong-termwhaleshassignificantlydampenedmomentum.Theindustryachieveditsregulatorygoals—includingstaking-enabledETFs—butpriceperformancelagged.”Thissuggeststhatshort-termcautionmaydominatetheBitcoinlandscapegoingforward.
*Please note,thisarticleisforinformationalpurposesonlyanddoesnotconstituteinvestmentadvice.*