bitcoin The drop below $60,000 to a new cycle low has left investors searching for a culprit. According to Greg Cipolaro, global head of research at NYDIG, there probably isn’t just one.
In a report last week, he argued that bitcoin and the broader crypto market are facing several overlapping headwinds that have been weighing on prices.
AI trading is near the top of its list as bitcoin increasingly competes for capital with a sector that has become the market’s dominant growth story.
The overlap between AI and cryptocurrency investors is greater than many assume, he argued. Both attract investors seeking exposure to emerging technologies and outsized returns. As AI-related stocks continue to outperform, capital has followed and rotated out of cryptocurrencies, he wrote.
Investors are also preparing for what could be the biggest tech IPO cycle in years. Companies like SpaceX, OpenAI, and Anthropic are expected to eventually go public, and SpaceX is already in the process of making its debut. Large IPOs often prompt institutions to raise cash and reduce existing positions ahead of new offerings, creating a potential headwind for cryptocurrency demand, he wrote.
Cryptocurrencies have also been dealing with a number of industry-specific concerns.
Treasury Secretary Scott Bessent’s claim that US authorities seized approximately $1 billion in crypto assets linked to Iran raised questions about the government’s reach into digital asset markets. Details remain limited, but the episode challenged one of the core narratives of cryptocurrencies for some investors, Cipolaro said.
The threat of quantum computing also returned to the conversation after researchers published new work showing that the computational resources needed to attack widely used cryptographic systems may be declining faster than previously thought.
Then there is the (MSTR) strategy that sells bitcoins.
The sale of 32 BTC, worth $2.5 million at the time, was insignificant from a supply perspective, but carried more weight psychologically. Strategy has been one of the most consistent buyers in the market for years, Cipolaro said. Any suggestion that it could become a source of supply, he argued, forces investors to rethink an important pillar of the bullish argument.
Taken together, those developments could explain why Bitcoin has struggled despite there being no obvious deterioration in underlying network activity or adoption trends.
“Viewed independently, none of these developments appear sufficient to drive a major correction in bitcoin,” Cipolaro wrote. “Viewed together, they help explain why the price action has weakened despite the absence of a clear deterioration in the underlying adoption metrics.”
Has Bitcoin found a bottom?
Cipolaro’s onchain analysis offers a mixed answer.
Several indicators are approaching levels that have historically coincided with important lows, he noted. Bitcoin’s MVRV ratio has fallen to 1.2, close to the level where market value converges with investors’ aggregate cost base. The percentage of supply held for profit recently fell below 50%, another metric often associated with capitulation.
However, the reduction itself remains relatively modest by historical standards.
Bitcoin fell about 53% from its peak ($126,000 in October), a much smaller drop than the 75%-90% declines seen in previous cycles, he noted.
There’s also a time element: Bitcoin’s three previous bear markets lasted roughly a year from peak to trough, with the exception of its first bear market which ended in 163 days in 2011.
Friday’s drop below $60,000 came just 242 days after the peak.
That means either institutional adoption has fundamentally changed the behavior of the bitcoin cycle, or that the market simply has not reached a true capitulation phase yet.
“Onchain data suggests that the market has undergone a significant reset,” Cipolaro wrote.
But whether the floor is already in place “probably depends on whether institutional demand has structurally altered the cycle or simply delayed a deeper reset,” he added.
