- Bitcoin is down 28% so far this year.
- The cryptocurrency market has lost $2 trillion since the October peak.
- The defeat may have been caused in part by Warsh’s selection.
Bitcoin plunged on Thursday, its decline accelerating amid weakening risk sentiment driven in part by volatility in precious metals and a broad sell-off in technology stocks.
The world’s largest cryptocurrency, BTC, fell to a low of $63,295.74, its weakest level since October 2024, a month before Republican Donald Trump won the US presidential election, having signaled his intention to support cryptocurrencies during the campaign. It was last down 12.6% at $63,525, on track for its biggest one-day drop since November 2022.
According to data from CoinGlass, approximately $1 billion worth of bitcoin positions have been liquidated in the last 24 hours.
In total, the global cryptocurrency market has lost $2 trillion in value since peaking at $4.379 trillion in early October, CoinGecko data showed, with some $800 billion wiped out in the last month alone.
Bitcoin has already fallen 17% on the week, bringing its year-to-date losses to 28%. Ether, the second-largest cryptocurrency in terms of market capitalization, fell more than 13% to $1,854 late on Thursday. Ether has fallen 19% this week, with losses of almost 38% so far this year.
Sentiment on cryptocurrencies was affected by the latest sales in metals and stocks. Gold and silver, for example, have become more volatile as a result of leveraged buyouts and speculative flows. Silver, for example, fell as much as 18% to a low of $72.21.
In stocks, the S&P sank to a seven-week low, while the Nasdaq fell to its lowest level in more than two months on Thursday, as the AI issue came under renewed pressure.
“It is clear that the cryptocurrency market is now in full capitulation mode,” said Nic Puckrin, investment analyst and co-founder of Coin Bureau. “If previous cycles are anything to go by, this is no longer a short-term correction, but rather a transition from distribution to reset, and this typically takes months, not weeks.”
The latest cryptocurrency crash has sent down shares of companies that hold bitcoin and other digital assets, stoking concerns that the market turmoil is spreading beyond token prices.
Markets fear “a hawk” with Warsh
Trump’s selection of Kevin Warsh as his nominee to become the next chairman of the Federal Reserve has also fueled the latest decline in cryptocurrencies, some analysts said, due to expectations that it could reduce the Federal Reserve’s balance sheet.
Cryptocurrencies have been widely seen as beneficiaries of a large balance sheet as they tended to rally as the Federal Reserve greased money markets with liquidity, a support for speculative assets.
“The market fears a hawk with it,” says Manuel Villegas Franceschi of Julius Baer’s next generation research team. “A smaller balance sheet will not provide any tailwind for cryptocurrencies.”
To be sure, cryptocurrencies have struggled for months since a record drop last October saw Bitcoin fall from a peak as leveraged positions disappeared, leaving investors less interested in digital assets and fragile market sentiment.
“We believe this broader decline is primarily due to massive withdrawals from institutional ETFs (exchange-traded funds). These funds have seen billions of dollars leave each month since the October 2025 crisis,” Deutsche Bank analysts said in a note to clients.
They added that US spot bitcoin ETFs saw outflows of more than $3 billion in January, following outflows of around $2 billion and $7 billion in December and November, respectively.
“In our view, this continued selling indicates that traditional investors are losing interest and that general pessimism about cryptocurrencies is growing,” the analysts said.
Broader issues in the tech sector
Bitcoin’s fortunes have been tied to the broader technology sector for some time. The price tended to rise, especially thanks to investors’ enthusiasm for artificial intelligence.
This week’s decline in global software stocks has accelerated the decline in value of bitcoin, ether and other tokens.
Market watchers are starting to wonder if this drop marks the beginning of a steeper correction.
“Concerns are emerging around crypto miners and whether we could be looking at 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 cryptocurrencies has always been that they should never be more than a very small portion of the overall portfolio. However, it is also a heavily held asset class, particularly by retail investors, and therefore increases overall market risk,” Kumar said.
