Bitcoin’s dramatic descent accelerated Thursday, breaching the psychologically critical $70,000 threshold as the world’s largest cryptocurrency extends what has become one of its steepest sell-offs in recent memory.
The digital currency tumbled as much as 3.8% to reach $69,858—its lowest level since November 2024, when Donald Trump’s presidential election victory had sparked optimism across the crypto sector. Trump’s campaign-trail promises to champion digital assets now seem a distant memory as the market confronts a harsh new reality.
The damage has been swift and severe. Bitcoin has shed nearly 8% this week alone, pushing year-to-date losses to approximately 20%. Ether, the second-largest cryptocurrency, has fared even worse, declining nearly 2% to $2,090 on Thursday and suffering losses approaching 30% for 2025.
Market analysts point to a specific catalyst for the latest wave of selling: the nomination of Kevin Warsh as the next Federal Reserve Chair. Investors fear Warsh’s appointment signals a more hawkish monetary policy approach, particularly regarding the Fed’s balance sheet.
“The market fears a hawk with him,” explained Manuel Villegas Franceschi from Julius Baer’s next generation research team. “A smaller balance sheet is not going to provide any tailwinds for crypto.”
The connection is straightforward: cryptocurrencies have historically thrived during periods of abundant liquidity, rallying when the Federal Reserve expanded its balance sheet and pumped money into financial markets. A reversal of that dynamic—with the Fed potentially shrinking its holdings—removes a key support for speculative assets like digital currencies.
The numbers tell a sobering story. According to data from CoinGecko, the global cryptocurrency market has hemorrhaged nearly $1.9 trillion in value since reaching a peak of $4.379 trillion in early October. A staggering $800 billion of that destruction has occurred in just the past month.
While this week’s decline has captured headlines, the troubles began months earlier. A record crash last October sent bitcoin tumbling from its all-time highs, triggering a cascade of liquidations as overleveraged positions were forcibly unwound. The aftermath has left investors gun-shy and market sentiment decidedly fragile.
Perhaps most concerning for crypto bulls is the evidence of sustained institutional withdrawal from the market. Deutsche Bank analysts highlighted a troubling pattern in their client note: massive, persistent outflows from cryptocurrency exchange-traded funds.
“We believe this broader decline is mainly driven by massive withdrawals from institutional ETFs,” the Deutsche Bank team wrote. “These funds have seen billions of dollars flow out each month since the Oct 2025 downturn.”
The figures are stark. U.S. spot bitcoin ETFs recorded more than $3 billion in outflows during January alone. That followed redemptions of approximately $2 billion in December and $7 billion in November—a relentless three-month exodus totaling $12 billion.
“This steady selling, in our view, signals that traditional investors are losing interest, and overall pessimism about crypto is growing,” the analysts concluded.
Bitcoin’s fate has become increasingly intertwined with the broader technology sector, particularly during the recent artificial intelligence investment boom that lifted both tech stocks and cryptocurrencies. But that correlation has now turned against digital assets.
This week’s brutal selloff in global software stocks has accelerated the decline across crypto markets, pulling down bitcoin, ether, and a wide array of alternative tokens. The synchronized selling suggests investors are treating cryptocurrencies as part of the same risk-on trade that includes high-flying tech equities
As prices continue their descent, market observers are beginning to voice concerns about potential second-order effects that could exacerbate the downturn.
“Concerns are being raised around the crypto miners and whether we could be looking at forced liquidations if prices continue to fall, which could lead to a vicious cycle,” noted Jefferies strategist Mohit Kumar.
The fear is that cryptocurrency mining operations, which often carry significant debt loads and operate on thin margins, could be forced to sell their bitcoin holdings if prices fall further. Such forced selling could trigger additional price declines, creating a self-reinforcing downward spiral.
Kumar offered a measured assessment of crypto’s role in investment portfolios: “Our view on crypto has always been that it should never be more than a very small portion of the overall portfolio. However, it is also an asset class that is heavily owned, particularly by retail investors, and hence adds to the overall market risk.”
That final observation underscores a key vulnerability in the current market structure. While institutional investors may have strict position limits and risk controls, retail investors—who constitute a significant portion of crypto holders—may be more prone to panic selling or may face margin calls that force liquidations.
As trading continues on Friday, all eyes will be on whether Bitcoin can stabilize above the $70,000 level or if further technical support levels will be tested. For an asset class that promised to revolutionize finance, the current moment represents a severe test of conviction for even the most ardent believers.
WHAT YOU SHOULD KNOW
Bitcoin has crashed below $70,000 to its lowest level since Trump’s election, down nearly 20% this year, as investors flee crypto en masse.
Kevin Warsh’s nomination as Fed Chair signals tighter monetary policy and a smaller Fed balance sheet—removing the easy money that fueled crypto’s rise.
Institutional investors have pulled $12 billion from Bitcoin ETFs over three months, signaling waning confidence in digital assets.
With nearly $2 trillion in market value already wiped out and crypto miners potentially facing forced liquidations, this could spiral into a much deeper correction.
This isn’t just another dip—it’s a fundamental shift as the era of cheap money ends and institutional money walks away.
