Bitcoin fell below $60,000 last Friday, hitting its lowest level since October 2024 and marking a cumulative retreat of over 50% from its all-time high above $126,000 last year.
Simultaneously, Bitcoin posted a 16% weekly decline, its worst single-week performance since the collapse of the Sam Bankman-Fried cryptocurrency exchange FTX in 2022.
Investors are pulling funds from Bitcoin exchange-traded funds (ETFs), technical indicators are weakening, and interest rate expectations are shifting.
While the current crypto winter is milder than previous ones, this may also signal that the worst phase has yet to arrive.
Griffin Arden, co-founder of multi-asset management firm Primal Fund, stated, "I believe there is still room for further decline. There is some distance to go before a true bottom is reached."
The recent sell-off in Bitcoin was partly triggered by MicroStrategy Inc. (MSTR.US) selling a small portion of its Bitcoin holdings.
This divestment by the world's largest corporate Bitcoin holder broke its previous narrative of "never selling Bitcoin."
Although MicroStrategy attempted to stabilize market sentiment on Monday by announcing a purchase of approximately 1,550 Bitcoins for about $101 million—far exceeding the $2.5 million previously sold—market confidence may not recover easily.
Technical signals are also deteriorating.
Last week, Bitcoin broke below its 200-week moving average, a key indicator many traders use to gauge market support.
Breaking below this level often intensifies caution, as it suggests the market is more likely to face selling pressure on rebounds rather than attract follow-on buying.
Arden noted that during genuine market bottoming phases, long-term options typically show a more pronounced bullish bias, but such signs are currently absent.
Meanwhile, investors have already begun to waver.
U.S. spot Bitcoin ETFs have experienced net outflows for 13 consecutive trading days, with cumulative outflows reaching approximately $5.5 billion.
Paul Howard, a senior director at crypto trading firm Wincent, described the current market conditions as a "silent bear market," as there has been no major crash event akin to FTX.
Howard stated, "Breaking below the 200-week moving average provides significant confirmation that the market may have entered a bearish phase."
He added that given Bitcoin's volatility remains elevated, "this rally is unlikely to be sustained."
Shifting interest rate expectations are also part of the problem.
The unresolved U.S.-Iran conflict and robust U.S. employment data have shifted market expectations from anticipating Federal Reserve rate cuts to repricing the possibility of hikes.
As expectations for higher borrowing costs rise, capital is flowing out of high-risk speculative assets like cryptocurrencies.
Rajeev Sony, head of international portfolio management at digital asset manager Wave Digital Assets, remarked, "This is a massive reversal of expectations."
Sony also pointed out that the previously positive correlation between Bitcoin and U.S. stock markets has weakened as capital flows from cryptocurrencies toward artificial intelligence and technology companies.
However, even if the stock market corrects in the future, he does not believe funds will return to the crypto market on a large scale.
Nevertheless, the magnitude of Bitcoin's current correction remains less severe than in past crypto winters.
Bitcoin is currently down about 50% from its peak, whereas previous bear markets often saw declines nearing 80%.
After peaking in 2021, Bitcoin took over a year to truly bottom out and another 15 months to reclaim its highs.
For this reason, some traders are hesitant to conclude that the crypto market has already bottomed.
Hayden Hughes, managing partner at investment firm Tokenize Capital, stated that digital asset reserve companies like MicroStrategy are creating "a unique risk" for the crypto industry.
These companies hold substantial amounts of cryptocurrency. Should financing conditions tighten or their stock prices fall, they may be forced to sell assets.
Hughes indicated that the stock market could face systemic risks in the coming months, which could further spill over into the cryptocurrency market.
He noted that while the current Bitcoin decline has not yet reached historical bear market levels, the key word is "yet," implying Bitcoin still has potential downside.
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