The relentless ascent of Bitcoin, fueled by speculation and a narrative of digital gold, has hit a stark reality check. This week, the cryptocurrency experienced a dramatic sell-off, erasing all gains made since Donald Trump’s re-election in 2024 and triggering fears of a renewed “crypto winter.” The decline, which saw Bitcoin briefly dip below $60,000, underscores the inherent volatility of the asset class and raises questions about its long-term sustainability, even with a supportive figure like President Trump in the White House.
The recent downturn has been swift and substantial. Bitcoin fell nearly 50% from its peak of over $127,000 in October of last year, with over $1.25 billion in positions liquidated between Thursday and Friday alone, according to data from Coinglass. This rapid descent has shaken investor confidence and prompted a scramble for explanations.
Several factors appear to be contributing to the pressure on Bitcoin. A broader sell-off in global stock markets, coupled with geopolitical uncertainty and volatility in traditional safe-haven assets like gold and silver, has created a risk-off environment that has impacted the entire cryptocurrency market. Analysts at CryptoQuant point to a reversal in institutional demand, noting that US exchange-traded funds (ETFs) that were actively buying Bitcoin last year are now selling it.
The situation is particularly awkward given the strong support for cryptocurrency from President Trump. Despite his administration’s efforts to foster a “crypto-friendly” environment – including establishing a strategic bitcoin reserve, pardoning convicted crypto criminals, and allowing retirement accounts to invest in digital assets – Bitcoin’s price has faltered. This raises a critical question: if Bitcoin cannot thrive under a president actively championing its adoption, when can it?
The narrative surrounding Bitcoin has long been one of resilience, with proponents consistently predicting a rebound after every crash. However, this week’s decline suggests that the supply of “greater fools” – investors willing to buy at increasingly inflated prices – may be dwindling. The belief that Bitcoin is immune to market forces is being challenged, and the underlying fundamentals of the asset are coming under scrutiny.
Some within the crypto community are attempting to downplay the severity of the situation. Balaji Srinivasan, a prominent crypto evangelist, proclaimed on X (formerly Twitter) that he has “never been more bullish on crypto,” arguing that the collapse of the traditional financial system will ultimately benefit digital currencies. Michael Saylor, CEO of Strategy and a major Bitcoin proponent whose company holds over 713,000 BTC, even suggested that supporters purchase Bitcoin as a birthday gift. However, Strategy’s recent earnings call revealed a substantial loss of $12.4 billion, highlighting the financial risks associated with a heavy Bitcoin investment.
The current situation echoes the “crypto winter” of 2022, characterized by widespread bankruptcies and significant losses for investors. While it remains uncertain whether Bitcoin has reached its ultimate bottom – some analysts, like Barry Bannister at Stifel, predict a further decline to around $38,000 – the recent price action suggests that the era of easy gains is over. The volatility inherent in the crypto market means investors should consider limiting their exposure, with financial advisors suggesting no more than 5% of a portfolio be allocated to these assets.
The question now is not simply whether Bitcoin will recover, but whether the fundamental premise of its value proposition – a decentralized, scarce digital asset immune to government control – can withstand the forces of market skepticism and regulatory scrutiny. The coming months will be crucial in determining whether Bitcoin can regain its footing or succumb to the forces that have historically plagued it. The “jusqu’ici tout va bien” mantra of the crypto community may be reaching its limit, as the ground rapidly approaches.
