Bitcoin, barely 17 years old, has already lived many lives. Initially an ingenious digital means of exchange – allowing for pizza purchases without bank intermediaries – it later became associated with criminals seeking discretion. Its growing adoption then propelled it into the portfolios of global asset managers. Today, a handful of states and proponents envision it as a digital safe haven, an alternative to gold. In its short history, its price has flirted with zero, experienced declines exceeding 90%, and ultimately reached a peak of $126,000 in October 2025. Despite this recent dip below $70,000, Bitcoin, on paper, appears resilient enough to absorb the current downturn, and potentially rebound.
The current pullback is proving particularly unsettling for Bitcoin miners, upon whom a portion of the system relies, and for “Bitcoin Treasury Company” maximalists – those accumulating substantial Bitcoin holdings. These entities often have a floor below which they cannot allow Bitcoin’s price to fall. Contagion from this crash to Wall Street, increasingly intertwined with the crypto sector, is not impossible. Outflows from Bitcoin exchange-traded funds (ETFs), where the cryptocurrency is now widely traded, are significant, dragging the broader crypto market – a $2.3 trillion sector – down with it.
More concerning is the erosion of the narratives surrounding Bitcoin. It is no longer widely considered a currency, lacking the incentives for widespread adoption. Heavily financialized, its potential for further financialization is questionable. Its image remains tarnished by associations with criminal activity. It generates no income and has no function in the real economy. Its use as a store of value is precarious given its extreme volatility and correlation with macroeconomic conditions. Gold, safely stored in vaults for millennia, remains a more stable option. Adding to the unease is the increasing concentration of Bitcoin ownership in the hands of controversial figures.
Bitcoin’s recent rally was partly fueled by actions taken by the U.S. President, who during his first year in office, methodically worked to deregulate and favor the sector – actions not without potential conflicts of interest – and even floated the idea of a strategic Bitcoin reserve, a plan not yet fully implemented. Despite these favorable conditions, Bitcoin is currently falling in line with broader market declines. Whether the President will redouble efforts to bolster Bitcoin remains to be seen, though a global economic upswing benefiting Bitcoin appears less likely.
A sense of waning dominance is palpable. The center of gravity within the crypto space is shifting away from Bitcoin towards stablecoins – tokens pegged to traditional currencies. These stablecoins could potentially carve out a niche in international trade. However, the underlying technology, blockchain, is rapidly integrating into banks and financial services, lauded for its security and speed. A telling sign is Tether, the issuer of USDT – one of the world’s most popular stablecoins – which is accumulating gold reserves.
Analysts are increasingly warning of potential collapse. Cyber Capital founder Justin Bons predicts Bitcoin could collapse within the next 7 to 11 years, citing declining security budgets and a rising risk of 51% attacks – where a single entity gains control of the network and can manipulate transactions. Bons argues that maintaining network security requires either sustained exponential price growth or permanently high transaction fees, both of which he deems unrealistic. He points to the halving of miner rewards, which reduces the incentive to secure the network, and the increasing efficiency of mining hardware, which lowers the cost of attacking the network.
The scale of the recent wipeout is significant. Bitcoin erased over $600 billion in value after falling from its peak of $126,000 in October 2025, currently trading in the $92,000-$93,000 range as of early December 2025. Despite the crash, Bitcoin still maintains a market capitalization of around $1.8 trillion, while the overall crypto market stands near $3.1–3.2 trillion, underscoring the role of digital assets in global finance. However, the rapid gains experienced previously often attract speculative buying, and reversals can be equally dramatic.
The situation is further complicated by the concentration of Bitcoin holdings. Michael Saylor of Strategy, who holds over 3% of the total 21 million Bitcoin in existence, and Donald Trump are significant holders, raising concerns about market manipulation and centralized control. The limitations of Bitcoin’s governance structure also contribute to the uncertainty. The Bitcoin Core development team’s resistance to increasing block sizes or allowing inflation beyond the 21 million coin cap could lead to chain splits or instability.
While some institutions and analysts view the current downturn as a correction within Bitcoin’s long-term growth cycle, citing strong institutional adoption, the risks are undeniable. Platforms like Polymarket, where users bet on future outcomes, currently favor a Bitcoin price floor of $55,000 in February, indicating a significant degree of uncertainty. The future of Bitcoin remains unclear, but the warning signs are mounting, suggesting a period of increased volatility and potential decline.
