Key Points
- The total crypto market value has fallen 20% from its October peak, erasing nearly all of this year’s gains.
- The downturn began with a massive liquidation of leveraged positions, shattering trader confidence.
- Bitcoin is on track for its worst week since March and has fallen below its 200-day moving average.
- Altcoins have been hit the hardest, with little new money flowing into them.
In just over a month, the cryptocurrency market has lost almost all of the gains it made this year. At its peak on October 6, the total market value of all cryptocurrencies reached nearly $4.4 trillion. But a 20% drop since then has left the asset class up only a modest 2.5% for the year, according to CoinGecko data.
The downturn started when about $19 billion in leveraged positions were suddenly liquidated just days after the all-time high. This shattered trader confidence, and there are few signs of a rebound. This performance is a shock that few would have predicted, especially in a year where regulators, global banks, and institutional investors have been embracing digital assets more tightly.
President Donald Trump’s push to make the U.S. the world’s crypto hub had previously sparked a wave of activity, sending Bitcoin up by as much as 35%. In a dramatic reversal of fortune, the total market value of digital assets is now lower than it was when Trump took office.
Bitcoin has fallen 9% this week alone, putting it on track for its worst weekly performance since March. It has also dropped below its 200-day moving average, a key support level that has held since the 2022 bear market. As of Friday afternoon in London, Bitcoin was trading just below $100,000.
While the selloff has been widespread, the biggest losses have been in “altcoins”—smaller, more volatile tokens—which have performed poorly this year. “Excluding Bitcoin and Ether, crypto has largely been trading on the back foot for months,” said Augustine Fan, a partner at SignalPlus. “There’s been little new money flowing into alt-tokens or DeFi projects.”
Jeff Mei, chief operating officer of crypto exchange BTSE, suggested that the latest dip was partly driven by “concerns that AI stocks are severely overvalued.” He warned that a selloff in AI and tech stocks could push Bitcoin below the $100,000 mark and cause altcoins to fall even further.
Despite the negative sentiment, there are some small signs of stability. After six straight days of net outflows, U.S. spot Bitcoin and Ether ETFs saw $253 million in inflows on Thursday.
