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Bitcoin Could Fall Even Further After Its Worst Week Since the FTX Collapse
Bitcoin’s fall below $60,000 last Friday capped its worst week since the collapse of Sam Bankman-Fried’s FTX exchange in 2022. The forces currently at work seem almost harmless compared with those events, but that is exactly what worries analysts, who warn that the token’s modest rebound may prove short-lived as structural weaknesses are exposed. Bloomberg writes about this.
Investors are fleeing Bitcoin ETFs, technical indicators have weakened, interest-rate expectations have shifted, and although the current “crypto winter” is milder than previous ones, that may mean the worst is still ahead.
“I think the decline will continue,” said Griffin Ardern, co-founder of multi-asset management firm Primal Fund. “We are still quite far from a real bottom.”
Bitcoin partially recovered after a 16% collapse in the seven days through Sunday — its sharpest weekly decline since the FTX bankruptcy triggered a 23% drop in November 2022. The fall below $60,000 pushed the token to its lowest level since October 2024, bringing the price more than 50% below last year’s record high above $126,000.
The sell-off was partly linked to Michael Saylor’s Strategy Inc. selling a tiny portion of its Bitcoin, undermining the narrative that it would never sell. On Monday, the company said it had bought 1,550 Bitcoin for about $101 million — far more than the $2.5 million it sold — but restoring market confidence may not be so simple.
Technical signals have weakened. Last week, Bitcoin fell below its 200-week moving average, a metric many traders use as an indicator of market support. A break below this level may increase caution, as it suggests rallies will be sold rather than bought. Investors have already started to waver: they withdrew around $5.5 billion from US spot Bitcoin ETFs over 13 consecutive days of net outflows.
Paul Howard, senior director at crypto trading firm Wincent, described the current decline as a “quiet bear market” because there has been no major FTX-style collapse.
“The break below the 200-week moving average gives important confirmation that markets may have entered a bearish phase,” he said, adding in light of elevated volatility: “This rally is unlikely to prove sustainable.”
The shift in interest-rate expectations is part of the problem, as the prospect of higher borrowing costs draws capital away from speculative assets such as cryptocurrencies. The unresolved war between the United States and Iran and strong US employment data have led markets to move from expecting a Fed rate cut to pricing in the probability of a rate hike.
“This is a major reversal in expectations,” said Rajiv Sawhney of Wave Digital Assets.
According to him, Bitcoin has also lost its positive correlation with US equities as money has flowed out of crypto and into AI and technology companies.
The current correction is still milder than previous “crypto winters”: Bitcoin has fallen about 50% from its peak, compared with drawdowns of around 80% in previous bear markets. After the 2021 peak, Bitcoin took more than a year to reach a bottom and another 15 months to recover its highs.
Hayden Hughes, managing partner at Tokenize Capital, noted that companies holding cryptocurrency in their treasuries, such as Strategy, create “idiosyncratic risk for the crypto industry”: they hold large amounts of cryptocurrency and could become forced sellers if financing conditions tighten or their share prices fall.
There are also systemic risks that could pressure equity markets and spill over into crypto. Bitcoin’s decline may not have matched past cycles, he said, but the word “yet” is hanging over the market.
See also: "Grayscale Warns That Strategy May Struggle to Keep Buying Bitcoin"
