Bitcoin has bounced back from a dip near $60,000 to approximately $69,000, effectively erasing the gains it achieved following Donald Trump’s election in November 2024.
This decline in cryptocurrency was part of a larger market downturn that resulted in the CoinDesk 20 (CD20) index losing over 17% of its value within just one week.
During this recent seven-day period, Bitcoin experienced a drop of around 16.5%, while other cryptocurrencies suffered even greater losses. Ether plummeted by 22.4%, BNB fell by 23.4%, and Solana saw a decrease of 25.2%. Despite a brief recovery on Friday when Bitcoin’s price momentarily crossed $70,000, shares linked to crypto firms still faced significant declines.
The sharp drop was described by Wintermute as the most severe single-day decline for Bitcoin since the FTX collapse occurred.
The sell-off was largely driven by widespread liquidations across the market and what Jasper De Maere from Wintermute referred to as an overwhelming “sell at any price” mentality among traders.
De Maere noted that institutional trading desks reported “small but manageable liquidation,” which did not fully account for the magnitude of this market movement, sparking discussions about where stress points existed within the system.
He further explained that this cascade effect coincided with broader deleveraging across various asset classes; for instance, the Nasdaq-100 tracker QQQ dropped nearly 500 basis points over three sessions while silver and gold prices fell approximately 38% and 12% below their respective cycle highs.
In terms of crypto options trading, implied volatility surged into its highest percentile range with an unusual tilt towards expensive put options being purchased during this time frame.
De Maere highlighted ether as being at “the epicenter of distress,” noting that many traders rushed to acquire protective put options against potential further declines—these contracts allow holders to sell at predetermined prices if values fall. In relation to Bitcoin positioning, he indicated expectations for ongoing volatility with traders eyeing ranges between roughly $55,000 and $75,000 moving forward.
This week also brought negative sentiment after Gemini announced plans to cease operations in regions including the U.K., European Union, and Australia while laying off about one-quarter of its workforce due to restructuring efforts. Users in these areas will transition into withdrawal-only mode before partnering with brokerage platform eToro for asset transfers.
Conversely, Bitfarms (BITF) saw an uptick in share prices after rebranding away from being solely identified as a “bitcoin company” toward focusing on artificial intelligence (AI) infrastructure instead.
The overall market structure has contributed significantly to current instability; according to Kaiko research analyst Thomas Probst speaking with Reuters: Bitcoin’s average depth for executing trades without impacting market pricing has decreased from over $8 million down to around $5 million since early last year—lower depths can lead directly towards more abrupt price fluctuations occurring during trades or sales made close together time-wise .
Additonally , flows related specifically targeting spot bitcoin ETFs have turned negative recently ; SoSoValue data indicates net outflows totaling roughly $1 .25 billion across just three days alone . Jim Bianco , founder Bianco Research , estimated via social media channels average ETF cost basis now hovers near $90k leaving holders facing approximately $15 billion worth unrealized losses currently outstanding .
“Crypto is often referred too as ‘programmable money’ so logically speaking BTC should behave similarly software stocks ” stated Bianco adding recent drops suggest it’s been trading parallel alongside such equities lately.
This past week saw notable declines amongst several prominent software companies following Anthropic unveiling new automation tools aimed primarily towards legal workflows & knowledge-focused sectors resulting Salesforce (CRM), Adobe(ADBE), ServiceNow(NOW ) experiencing respective weekly drops averaging between eight percent through thirteen percent each respectively.
According BTIG chief technician Jonathan Krinsky correlation exists presently linking both bitcoin/software stock performances together closely ;“Evidence suggests tactical lows established recently might indicate turning point ahead.” Krinsky remarked during CNBC interview session commenting “[Bitcoin] found support right around sixty thousand mark indicating solid level against which future trades could occur.”
“To see any upside movement though requires reclaiming territory above seventy-three thousand threshold —that represents key breakdown point confirming tradable low definitely present.” he concluded.
The Trump administration continues promoting pro-crypto policies helping push bitcoin prices beyond all-time highs exceeding twelve-five thousand dollars last year prior correction phase initiated thereafter.