Bitcoin Faces Continued Decline Amid Market Sell-Off
Bitcoin and other cryptocurrency-related companies experienced a significant drop on Monday, continuing a trend that has lasted nearly two months. This decline aligns with a broader sell-off in technology stocks, which many investors believe have become overpriced.
Bitcoin fell by 6.5% after initially dropping nearly 12% during the day, closing at just above $85,000. It has decreased about 33% since reaching a record high of $126,210.50 on October 6, according to data from Coinbase, a popular cryptocurrency trading platform. Bitcoin had enjoyed a steady rise since April, partly due to a more favorable attitude towards cryptocurrencies from policymakers in Washington.
The recent sell-off hit companies that facilitate cryptocurrency trading hard. Coinbase Global’s shares dropped by 5.4%, while online trading service Robinhood Markets fell by 4.4%. Bitcoin mining firm Riot Platforms saw a 2.8% decrease.
Strategy, a leading company that gathers funds to invest exclusively in Bitcoin, plummeted by 10%. It currently owns 649,870 Bitcoin, valued at around $55 billion as of 1 p.m. ET on Monday.
American Bitcoin, which includes President Donald Trump’s sons, has seen a steep decline of 8.1%. It is now down over 41% since September 30. Other cryptocurrency ventures linked to Trump are also facing losses. The market capitalization of World Liberty Financial token has dropped from over $6 billion to about $4.14 billion since mid-September. Additionally, the price of a meme coin named after Trump has fallen to $5.67 from $45 just before his inauguration in January.
Investors have been pulling out of spot Bitcoin exchange-traded funds (ETFs), which allow people to invest in Bitcoin without owning it directly. Last month, $3.6 billion was withdrawn from these ETFs, marking the largest outflow since they began trading in January 2024.
In the past month, Bitcoin futures have decreased nearly 24%, while gold futures have risen almost 7%. Analysts attribute this trend to a general risk-averse sentiment among investors, who are increasingly turning to safer options like bonds and gold.
Factors contributing to this crypto decline include institutional sell-offs, profit-taking by long-term holders, and a more cautious stance from the Federal Reserve. Stalled regulatory measures have also added to uncertainty in the market.
In a recent client note, analysts from Deutsche Bank remarked that the current volatility suggests Bitcoin’s role in investment portfolios is being tested. They questioned whether this is merely a temporary correction or a more extended adjustment.
On the regulatory front, the crypto sector received a boost when Trump signed laws in July that provided initial regulations and protections for stablecoins, which are linked to stable assets like the U.S. dollar. However, a bill aimed at creating a clearer market structure for cryptocurrencies remains stuck in the Senate. This legislation has been a top priority for the crypto industry, which has invested heavily in political campaigns to gain support in Washington.
