Bitcoin is experiencing renewed selling pressure, shedding nearly half its value since peaking in October 2024. The cryptocurrency’s recent decline, coupled with broader market uncertainty stemming from new US tariffs, is prompting analysts to question its viability as a “digital gold” and suggesting a potentially prolonged period of weakness.
As of , Bitcoin was trading around $60,033, a significant drop from its high of over $120,000. Ether, another leading cryptocurrency, has fared even worse, falling 37% year-to-date. The downturn follows a period of exuberance fueled by Donald Trump’s election victory in , during which he publicly supported the technology and celebrated Bitcoin surpassing $100,000.
However, the rally faltered in when the Trump administration announced sweeping US tariffs, triggering market volatility. While Bitcoin briefly recovered alongside stocks, reaching a record $126,251.31 six months later, investor enthusiasm has since waned, largely due to regulatory uncertainty. A key piece of legislation, the Clarity Act, intended to provide a comprehensive regulatory framework for cryptocurrencies, remains stalled in the Senate.
“A key test for Bitcoin’s ability to sustainably recover will be the passage of the Clarity Act,” according to analysts at Deutsche Bank. The lack of clear regulations is contributing to investor impatience and risk aversion.
The recent sell-off in Bitcoin has been exacerbated by a simultaneous pullback in precious metals like gold and silver, as investors took profits after a period of strong gains. This triggered a broader flight to safety, with investors selling cryptocurrencies and other risky assets to raise cash. “This break is not happening in a vacuum, but in a context of widespread mistrust,” noted John Plassard, head of investment strategy at Cite Gestion Private Bank.
The narrative of Bitcoin as a safe-haven asset, often referred to as “digital gold,” is increasingly being challenged. Unlike gold, which has a history of being accepted for payments and as a store of value, Bitcoin’s use cases remain limited, primarily to crypto transactions or illicit activities. The comparison to gold highlights a fundamental difference in market perception and acceptance.
Analysts are divided on the extent of the current downturn. Some anticipate further declines, with potential support levels around $50,000 before a possible rally in the second half of . This suggests a consensus view that the downward trend is likely to persist in the near term.
Ed Engle at Compass Point has drawn comparisons between the current crypto bear market and the one experienced in . However, Engle believes the current situation is less severe, as it hasn’t been accompanied by a wave of bankruptcies among major crypto lenders and prime brokers. While one such firm failed earlier this month, it was not considered large enough to trigger a systemic crisis.
“There hasn’t been this big bust of lenders of prime uh brokers, the way it was back in 2022,” Engle noted. This relative stability, he argues, suggests the current bear market may be more protracted than catastrophic.
Despite the lack of widespread lender failures, the current environment presents challenges for investors who have been “buying the dip.” The ongoing regulatory uncertainty and the broader macroeconomic headwinds are likely to continue weighing on the cryptocurrency market in the short to medium term. The failure of Bitcoin to act as a safe haven during a period of global trade uncertainty further undermines its “digital gold” narrative, positioning it more closely as a high-risk tech stock.
The recent regulatory progress with the passage of a law regulating stablecoins in offers a glimmer of hope, but the stalled Clarity Act remains a significant obstacle to broader market confidence. The future trajectory of Bitcoin will likely depend on the resolution of this regulatory impasse and its ability to demonstrate a more compelling use case beyond speculative trading.
