Bitcoin Erases Year’s Gain as Crypto Bear Market Deepens

(Bloomberg) — Just a little more than a month after reaching an all-time high, Bitcoin has erased the more than 30% gain registered since the start of the year as the exuberance over the pro-crypto stance of the Trump administration fades and the recent cooling of high-flying technology stocks leads to a drop in overall risk appetite.

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The dominant cryptocurrency fell below $93,714 on Sunday, pushing the price beneath the closing level reached at the end of last year, when financial markets were rallying following President Donald Trump’s election victory. Bitcoin soared to a record $126,251 on Oct. 6, only to begin tumbling four days later after unexpected comments on tariffs by Trump sent markets into a tailspin worldwide.

“The general market is risk-off,” said Matthew Hougan, the San Francisco-based chief investment officer for Bitwise Asset Management. “Crypto was the canary in the coal mine for that, it was the first to flinch.”

Over the past month, many of the biggest buyers — from exchange-traded fund allocators to corporate treasuries — have quietly stepped back, depriving the market of the flow-driven support that helped propel the token to records earlier this year.

For much of the year, institutions were the backbone of Bitcoin’s legitimacy and its price. ETFs as a cohort took in more than $25 billion, according to Bloomberg data, pushing assets as high as roughly $169 billion. Their steady allocation flows helped reframe the asset as a portfolio diversifier — a hedge against inflation, monetary debasement and political disarray. But that narrative — always tenuous — is fraying afresh, leaving the market exposed to something quieter but no less destabilizing: disengagement.

“The selloff is a confluence of profit-taking by LTHs, institutional outflows, macro uncertainty, and leveraged longs getting wiped out,” said Jake Kennis, senior research analyst at Nansen. “What is clear is that the market has temporarily chosen a downward direction after a long period of consolidation/ranging.”

One of the starkest examples of a buying strike in the digital-asset community comes from Michael Saylor’s Strategy Inc., the software firm turned Bitcoin hoarder. Once the poster child for corporate treasury crypto plays, its stock is now flirting near parity to its Bitcoin stash — a sign that investors are no longer willing to pay a premium for Saylor’s high-conviction leverage model.

Boom and bust cycles have been a constant since Bitcoin burst into the mainstream consciousness with a more than 13,000% surge in 2017, only to be followed by a plunge of almost 75% the following year.

“The sentiment in crypto retail is pretty negative,” said Hougan, who sees the current pullback as a buying opportunity. “They don’t want to live through another 50% pullback. People are front-running that by stepping out of the market.”

Bitcoin has whipsawed investors through the year, dropping to as low as $74,400 in April as Trump unveiled his tariffs, before rebounding to record highs ahead of the latest retreat. The original digital asset accounts for almost 60% of crypto’s roughly $3.2 trillion in market value.

The market downturn has been even tougher on smaller, less liquid tokens that traders often gravitate toward because of their higher volatility and typical outperformance during rallies. A MarketVector index tracking the bottom half of the largest 100 digital assets is down around 60% this year.

“The markets are always an ebb and flow, and cyclicality in crypto is nothing new,” said Chris Newhouse, director of research at Ergonia, a firm specializing in decentralized finance. But “amongst friends, Telegram chats, and at conferences, the general sentiment I’ve received shows skepticism around capital deployment, and no natural bullish catalysts.”

–With assistance from Richard Henderson.

(Updates with more details beginning in fifth paragraph.)

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