The collapse of bitcoin has no brakes. So far this month, the leading cryptocurrency has fallen 23.5%, and is on track to post its worst monthly plunge since June 2022, when it fell 41.07%, rocked by the Earth/Moon collapse and widespread market contagion that culminated in the bankruptcy of exchange FTX by Sam Bankman-Fried. This Friday it was on the verge of losing the $80,000 level, although it managed to resist around the $82,000 level of last April, when Donald Trump’s tariff fury triggered panic in the markets.
Drops are very popular in the market. In the last seven days the main cryptocurrencies on the market have not escaped double-digit drops: bitcoin fell by 14%, ether by 14.5%, XRP by 15%, solana by 10%. Over the past 24 hours, selling pressure has intensified, with another $2 billion in leveraged positions liquidated, according to CoinGlass data compiled by Bloomberg. While strong price swings are typical of the cryptocurrency market, the sudden change in mood among investors is surprising. “Volatility is common, but what stands out this time is how quickly market conviction has evaporated,” says analyst Manuel Pinto.
Since mid-October, approximately $1.5 trillion of total market capitalization has disappeared. And the major cryptocurrencies have erased all their gains for the year. Bitcoin tumbles 10.8%, Ether tumbles 18.3% and XRP tumbles 7.5%. Selling in recent days has also accelerated the hemorrhaging of bitcoin exchange-traded funds: The 12 cryptocurrency ETFs in the United States recorded net outflows of $903 million on Thursday, the second largest daily outflow since their debut in January 2024. iShares Bitcoin Trust from BlackRock (IBIT) it lost $355 million, according to Coinmarketcap. It had already recorded withdrawals of around $523 million by Thursday, the largest single-day outflow since its launch in January 2024.
The massive sales in the crypto market are also affecting securities linked to digital assets: the titles of Strategy, the software It has become the largest accumulator of bitcoin, down more than 40% this year, and is trading at October 2024 levels. Its capitalization has fallen below the value of the bitcoin it holds, a sign that investors are no longer willing to pay a premium to acquire the company’s stock and calling into question the highly leveraged model of its founder, Michael Saylor.
Since the market crash on October 10, when $19 billion evaporated in a few hours following a tweet from Donald Trump, threatening to impose 100% tariffs on China, the market has not raised its head. Added to this are the tension on traditional markets due to the high valuations of technology stocks and the fear of an artificial intelligence bubble, which has unleashed a wave of risk aversion and put investors on alert, who have chosen to take profits and seek refuge in less volatile assets. And the unknown whether the Federal Reserve will cut rates further fuels uncertainty in the market.
Given the weakening of flows into ETFs, continued selling of long-term holders, and low participation from retail investors, several analysts agree that the cryptocurrency market has entered a bearish regime. This marks the end of the expected golden year for this market: Donald Trump’s return to the White House gave impetus to digital assets in the first part of the year, thanks to the more open attitude of the American administration, the approval of sector legislation and institutional support for the industry. But the change in investor mood is changing the course of the market.
This is not the first time the cryptocurrency market has undergone an upheaval of this magnitude. Although the underlying causes of the crashes are different, the wound caused by the 2022 crash is still fresh in investors’ memories. That year, expectations for cryptoassets were high: at the end of November 2021 they reached the all-time highs of the time and the big managers were already analyzing not so much whether or not to have these assets in their portfolio, but how much weight they should assign to them. But the fall in May 2022 of Earth/Moon, a stable currency The algorithm that did not survive the crisis of confidence and caused an avalanche of massive sales triggered panic. This asset collapsed in three days, taking with it around €35 billion from investors, and caused the failure of a handful of cryptocurrency exchanges, including FTX, one of the largest financial frauds in the history of the industry, which led to the market falling into a deep crypto winter.
