$Coinbase Global, Inc.(COIN)$
Investing.com | Author Vahid Karaahmetovic
Published Dec 31, 0000 07:00PM ET
Updated Feb 05, 2026 10:00AM ET
Investing.com -- Bitcoin tumbled sharply this week, extending a months-long downturn as institutional demand faded and macro pressures intensified. The cryptocurrency fell below the $70,000 threshold on Thursday, marking a 44% retreat from its roughly $125,000 peak in October.
The latest sell-off followed a four-day slide triggered by news that U.S. President Donald Trump would nominate Kevin Warsh as the next Federal Reserve chair.
Warsh is known for backing higher real interest rates and a smaller Fed balance sheet, and his nomination weighed heavily on risk assets. Bitcoin posted its largest daily decline since 2018 at the end of January.
“Crypto bears are firmly in control as the likes of Bitcoin and other major altcoins turn back the clocks to revisit levels not seen since 2024," Han Tan, chief market analyst at Bybit Learn, told Investing.com.
While equities and gold have drawn dip-buyers, “the risk appetite surrounding cryptos is struggling to make a comeback,” Tan added, highlighting that roughly half a trillion dollars in total crypto market value has been erased over the past week.
"Retail traders and investors are being wooed by traditional mainstream assets of late, which raises the bar on the prospects of a sustained crypto recovery for the time being, given that major confidence-boosting catalysts appear scant along crypto’s near-term horizon," the analyst continued.
Despite the latest sell-off, Bitcoin remains about 370% higher than in early 2023. In a note to clients, Deutsche Bank analyst Marion Laboure said the broader downturn reflects a mix of “1) hawkish Fed signals; 2) institutional outflows and thinning liquidity; and 3) stalled regulatory momentum.”
A major drag has been sustained withdrawals from U.S. spot Bitcoin exchange-traded funds (ETFs). Laboure said these ETFs saw outflows of more than $7 billion in November, around $2 billion in December and over $3 billion in January alone.
"This steady selling in our view signals that traditional investors are losing interest, and overall pessimism about crypto is growing," Laboure wrote.
The deterioration in sentiment has been reflected in the Crypto Fear and Greed Index, which has fallen back toward 15, a level associated with “extreme fear,” while the bank’s consumer surveys show U.S. crypto adoption slipping to about 12% from 17% last summer.
"Ultimately, institutions cutting their Bitcoin exposure has led to less money being traded, which in turn has made Bitcoin’s price fall even harder," the analyst said.
Laboure also pointed to a breakdown in Bitcoin’s traditional market relationships. While gold surged over the past year, Bitcoin ended 2025 lower, suggesting it is no longer acting as “digital gold.” Its correlation with major U.S. equity indexes has also dropped sharply, with Bitcoin underperforming even as stocks held up.
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Meanwhile, the regulatory developments that have previously boosted crypto prices, have stalled. Progress on the Digital Asset Market CLARITY Act, which aims to establish a clearer framework for digital assets in the U.S., has been stuck in Congress for months, pushing volatility back toward late-2025 levels.
"Looking ahead, we believe a key test for Bitcoin’s ability to sustainably recover will be the passage of the CLARITY Act," Laboure commented, with recent reports indicating the White House has urged the two lobbying groups to reach an agreement by the end of February.
Laboure said Bitcoin’s recent moves signal the end of the so-called “tinkerbell effect,” with the asset shifting away from a purely speculative phase and toward a more institutional role. She noted Bitcoin is unlikely to replace gold or traditional currencies, as it lacks the core features of a medium of exchange or store of value, and that volatility “is not a bug but will likely persist as an inherent feature.”
Looking ahead, the analyst said regulatory progress, improved custody solutions and ETFs will be key to Bitcoin’s maturation, adding that the world’s largest cryptocurrency “won’t replace other traditional assets but is also unlikely to disappear.”
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Written By: Investing.com
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