Bitcoin, the world’s biggest cryptocurrency, sank last week, wiping out gains sparked by Donald Trump’s presidential election victory in November 2024. The digital currency slumped to $60,033.01 on Friday before trimming losses, and is down around half from its October peak above $120,000. But the rally suffered a sharp setback in April after Trump announced sweeping U.S. tariffs, rattling markets worldwide. Bitcoin later resumed its march higher along with stocks and other markets, and hit a record of $126,251.31 six months later.
But enthusiasm has faded as investors grow impatient over regulatory uncertainty. While the U.S. Congress passed a law in July to regulate stablecoins—a form of cryptocurrency backed by traditional assets—a broader crypto bill, the Clarity Act, has stalled in the Senate. “A key test for Bitcoin’s ability to sustainably recover will be the passage of the Clarity Act,” said Deutsche Bank analysts Marion Laboure and Camilla Siazon. The recent slide in precious metals like gold and silver—as investors locked in profits after their meteoric rise—was one of the main triggers for bitcoin’s slump.
“This break is not happening in a vacuum, but in a context of widespread mistrust,” said John Plassard, head of investment strategy at Cite Gestion Private Bank. “Volatility in technology and precious metals is fuelling a global movement to reduce risk.” The sell-off has been intensified by forced deleveraging, as investors who borrowed money to bet on bitcoin’s rise are forced to sell when losses mount, pushing prices lower. Cryptocurrency declines gathered pace last week as investors sold tech stocks on renewed concerns over an artificial intelligence bubble.
Analysts noted that bitcoin and AI-related stocks often move in the same direction. “In recent years, liquidity has flowed across digital assets and advanced tech stocks at the same time,” said Kathleen Brooks, research director at trading group XTB. “This means that both asset classes share a tight financial link.” Michael Burry, the entrepreneur who gained fame for spotting the 2008 subprime mortgage crisis, fanned fears on Monday as he flagged a possible “death spiral” for bitcoin.
The downturn has raised questions about the viability of digital asset treasury firms, which stockpile cryptocurrencies in a bet that prices will keep rising. Many of these firms are “sitting on significant unrealized losses,” said Charlie Sherry, head of finance at BTC Markets.
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