Bitcoin dipped well below $87,000 on Thursday, continuing a devastating, weeks-long slump.
The cryptocurrency is down almost ten percent over the last five days alone, wiping out much of its gains over the last seven months. It’s lost just over 30 percent of its value since hitting an all-time high of over $126,000 in early October.
The crypto industry as a whole has wiped out a staggering $1 trillion in market capitalization — and that’s under president Donald Trump, who’s positioned himself as a firm ally of the sector.
The graph showing Bitcoin’s value over the last six months tells a grim story: a massive, downward spiral after months of rallying.
While there are likely several factors at play, a major tech selloff earlier this month is related to Bitcoin’s woes, experts wager. Shares of AI industry stalwarts slumped, highlighting growing concerns over an AI bubble. Even Nvidia’s strong quarterly results on Wednesday failed to impart confidence, with the AI chipmaker’s shares sliding over two percent as the day wore on. Despite rallying this morning, the S&P 500 had fallen over a percent by the afternoon.
Investors clearly aren’t seeking solace in digital assets in droves. Instead, they’re turning to gold, which is “easily outperforming” Bitcoin per Bloomberg.
“Investors are stabbing in the dark a bit — they haven’t got any direction on macro, so all they can see is what on-chain whales are doing and they’re getting quite worried about it,” CoinShares head of research James Butterfill told the outlet on Wednesday.
The crash comes after the crypto market rallied to unprecedented heights this year, facilitated by an extremely pro-crypto Trump administration. Once seen as a hedge against inflation and stock market instability, the highly volatile token has instead largely followed Wall Street’s lead, particularly in the wake of the launch of crypto exchange-traded funds, allowing institutions to adopt the token in large numbers.
Jones Trading chief market strategist Mike O’Rourke told CNBC this week that the correlation between Bitcoin and the broader market was “undeniable.”
“It is alarming to see the [Nasdaq 100 stock] index — with its highly concentrated exposure to the largest and most influential companies in the world and the US equity market — take cues from Bitcoin,” he said.
Analysts suggest Bitcoin could continue to slide.
“I think we are closer to the end of the selling than the beginning, but markets are uncomfortable and crypto could have more downside here before it finds a base to recover from,” Bitwise Asset Management chief investment officer Matthew Hougan told Bloomberg.
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