Bitcoin just erased its gains for this year

Bitcoin is in the red for the year — and investors say more turbulence could be in store.

Just six weeks after notching a record high above $126,000, bitcoin has plummeted more than 28%. The cryptocurrency on Monday dipped below $90,000 for the first time in seven months, extending a slide that has erased all of its gains for this year.

In Wall Street terms, bitcoin is in a bear market — when a price falls more than 20% from a recent peak. Bitcoin has shed more than $600 billion in market value during its tumble, according to CoinMarketCap data.

Investors in recent weeks have increasingly shunned risky assets like AI stocks and crypto. Not helping: uncertainty about whether the Federal Reserve will cut interest rates next month. The risk-off attitude is weighing on bitcoin, a highly speculative and volatile investment.

“Bitcoin’s pullback is part of a broader shift in risk sentiment,” said Haider Rafique, global managing partner at OKX, a crypto exchange.

Meanwhile, long-term bitcoin investors may be closing their positions to lock in profits after meteoric gains in recent years.

“Bitcoin has struggled as a result of selling pressure from long-term holders taking profits but also uncertainty around Fed policy, the liquidity environment and other macro conditions,” said Gerry O’Shea, head of global market insights at Hashdex Asset Management.

Bitcoin has struggled to meaningfully recover since a flash crash on October 10 when President Donald Trump reignited his trade war with China. Some buyers and sellers have left the market since then, so there are fewer orders for bitcoin, leaving the price more susceptible to intense fluctuations, according to Peter Chung, head of Presto Research.

“Bitcoin is under pressure in line with other risk assets (see the price actions of the AI stocks), but its downside is amplified due to a crypto-specific factor — namely, the orderbooks have gotten thinner in the aftermath of the (October 10) liquidations, which hurt many market makers in the space,” Chung said in an email.

Up until recent weeks, it had been a relatively strong year for bitcoin. The cryptocurrency traded around $69,000 ahead of Trump’s reelection in November before surging about 83% — amid bouts of volatility — to its record-high above $126,000 in early October.

Bitcoin surpassed $100,000 for the first time in early December 2024 as investors leaned into optimism about the Trump administration ushering in crypto-friendly regulations.

Trump has embraced the cryptocurrency industry, and his administration has loosened oversight and advocated for pro-crypto legislation. The GENIUS Act was passed by Congress and signed into law by Trump in July, ushering in a new era of regulation for stablecoins, another kind of crypto.

Trump tapped Paul Atkins, a pro-crypto regulator, to chair the Securities and Exchange Commission, and cryptocurrencies continue to enter the mainstream, with new exchange-traded products giving investors easier access to buying and selling crypto.

Bitcoin traded around $94,000 entering the year. It has now wiped out its gains over the past 11 months. In comparison, the benchmark S&P 500 is up 13.4% this year. Gold prices are up 53%.

While tech stocks have also come under pressure, investors have been swooping in to the buy the dip. Nvidia (NVDA) on Friday tumbled as much as 3.36% before finishing the day higher by 1.77%. Nvidia on Monday fell as much as 3.08% before finishing the day lower by just 1.88%.

Meanwhile, bitcoin is still languishing around $90,000 and has yet to see a meaningful rebound. Some analysts say the crypto market is at an inflection point, where the positive catalysts this year have been priced in, and with increasing uncertainty about the outlook.

“How the market behaves over the next several days will signal whether this becomes a deeper reset or just a sharp, temporary dip in an otherwise intact cycle,” Rafique at OKX said.

Some crypto investors are still optimistic. Bitcoin in April had tumbled as low as about $74,500 before surging above $126,000 in early October.

“Right now, some investors see sideways churn and get spooked,” said Ryan Rasmussen, head of research at Bitwise Asset Management. “But in our view it’s the perfect opportunity for investors to build on existing bitcoin positions, and for those who have been sidelined to enter the market.”

CNN’s John Liu contributed to this report.

For more CNN news and newsletters create an account at CNN.com