It seems that Bitcoin (BTC) is on track to record its fourth annual decline in history, and this time without a major scandal or a comprehensive collapse in the cryptocurrency sector, as has happened in previous instances.
The largest digital currency in the world witnessed a sharp sell-off yesterday, during which it fell by as much as 5.2% in one day, recording a loss of nearly 7% since the beginning of the year. Although this decline is considered limited compared to the violent crashes in previous years, it comes in a completely different environment.
Since the collapse of 2022, the sector has seen significant growth in institutional adoption, a development in regulatory frameworks, along with explicit political support from U.S. President Donald Trump who declared cryptocurrencies a national priority. However, Bitcoin surprised investors with its rapid decline after reaching a historical peak exceeding $126,000 in early October.
Current indicators are not encouraging:
Trading volumes remain weak
Notable exit of investments from Bitcoin exchange-traded funds (ETFs)
A clear lethargy in the derivatives markets towards any potential price rebound
Even the large purchases by Strategy (formerly MicroStrategy) led by Michael Saylor have failed to change the overall trend. Pratik Kala, portfolio manager at Apollo Crypto, commented:
> "The lack of momentum despite numerous positive catalysts surprised many."
Notably, the movement of Bitcoin has decoupled from the stock market; while the S&P 500 index recorded a historical close and a 16% increase since the beginning of the year, and technology stocks achieved strong gains, Bitcoin remained under pressure.
Historically, the three major declines of Bitcoin have been associated with events that shook market confidence:
2014: The breach and collapse of the Mt. Gox platform (-58%)
2018: Explosion of the ICO bubble (-74%)
2022: Major bankruptcies including FTX and widespread regulatory tightening
The current decline is partially due to the accumulation of excessive leverage. On October 10, the liquidation of positions worth $19 billion revealed the fragility of the market and triggered a strong shock.
Kala adds:
> "The selling by old whales has intensified as momentum has sharply decreased. The sector received everything it wished for in terms of regulation, even ETFs with staking, but the price couldn't keep up with that."
All this data indicates that caution may remain the dominant sentiment in the near term within the Bitcoin market.
This post is for informational purposes only and should not be considered investment advice.
