Bitcoin Experiences First Decline in Two Months
On Monday, Bitcoin and associated cryptocurrency companies faced a downturn for the first time in nearly two months. This followed a broader market selloff in tech stocks, many of which are perceived as being overvalued.
Bitcoin dropped by almost 12% earlier in the day and eventually closed down by 6.5%, resting at just over $85,000. Since reaching a peak of $126,210.50 on October 6, it has now declined around 33%, according to data from Coinbase. The cryptocurrency had been on an upward trajectory since April, largely in sync with the stock market, fueled partly by a more favorable atmosphere in Washington state for crypto.
Many firms enabling cryptocurrency trading or focusing on Bitcoin as their main business suffered due to the selloff. Coinbase Global saw a decrease of 5.4%, while Robinhood Markets dropped by 4.4%. Riot Platforms, a Bitcoin mining company, fell by 2.8%.
Strategy, classified as a major crypto asset company, reported a decline of 10%. They currently hold about 649,870 Bitcoins, valued around $55 billion as of 1 p.m. ET on Monday.
In the US, Bitcoin shares linked to Eric Trump and Donald Trump Jr. have experienced an 8.1% drop, which translates to a decline over 41% since September 30.
Other Trump-associated crypto ventures have also taken a hit. World Liberty Financial Token (WLFI Dollar) saw its market value decline from over $6 billion in mid-September to approximately $4.14 billion. Additionally, $TRUMP, a meme coin associated with the former president, is now priced at $5.67—significantly down from its pre-inauguration asking price of $45.
Investing in Bitcoin through a spot Bitcoin ETF (exchange-traded fund) is gaining popularity, allowing investors to hold Bitcoin shares without direct ownership. However, November saw $3.6 billion withdrawn from the Spot Bitcoin ETF, marking the largest monthly outflow since its inception in January 2024, according to Morningstar Direct.
Over the past month, Bitcoin futures have plummeted nearly 24%, whereas gold futures have seen a rise of around 7%. Analysts attribute the downturn in Bitcoin and other cryptocurrencies to various factors, including a general risk-off sentiment this fall, which has led investors to safer assets like bonds and gold.
A research note from Deutsche Bank highlighted that institutional selling and profit-taking by long-term holders contributed to the drop in cryptocurrencies, alongside tightening from the Fed. They noted that the ongoing regulatory impasse around cryptocurrencies adds to the uncertainty in the market.
“Although volatility is part of the game, these trends suggest that Bitcoin’s portfolio consolidation is being tested. The question remains: is this a temporary or a longer-term adjustment?” the analysts remarked.
From a regulatory standpoint, the crypto sector got a lift in July when legislation was signed by President Trump, aimed at establishing initial guidelines and consumer safeguards, particularly for stable coins tied to assets like the US dollar to enhance stability. Nonetheless, a bill proposing a new market structure for cryptocurrencies is currently stalled in the Senate, despite being a priority for the industry.
