Bitcoin is currently grappling with a severe downturn, a development that may have flown under the radar as other assets like gold and silver dominated the headlines. As Business Insider noted, "Not to project, but there were other sell-offs in the likes of gold and silver sucking up most of the oxygen and attention."
Fed Hawk Sparks Latest Bitcoin Drop
The latest decline in bitcoin prices follows the nomination of Kevin Warsh as the Federal Reserve's new chair. Warsh is widely seen as "a hawk — especially when it comes to the size of the central bank's balance sheet — and hawkishness is bad for risk assets like crypto." This announcement has triggered what analysts describe as "the latest leg down, which pushed the price of bitcoin to its lowest level since Trump's election victory in November 2024."
The Bigger Picture: Months of Losses
The recent drop represents roughly the last 10% of bitcoin’s decline over the past few days. However, the cryptocurrency had already plunged nearly 30% in the months prior. As the article explains, "In the fourth quarter of last year, investors rotated out of riskier assets like tech stocks and crypto. This coincided with the Fed taking a more conservative tone around future rate cuts, after having already eased multiple times in 2025."
Unlike tech stocks, which have since bounced back to record highs, bitcoin "has continued to flounder," weighed down by crypto-specific obstacles such as delays in key regulatory measures.
Institutional Pressure Adds to Uncertainty
Another factor pressuring bitcoin is the position of crypto-focused firms, notably Strategy. These firms have "positioned their businesses around amassing as much of the crypto as possible," meaning that a falling bitcoin price increases the risk that they may be forced to sell.
Investors are particularly watching the $76,000 level — "the average that Strategy has paid for its tokens." Falling below this benchmark "means the firm is sitting on paper losses. The mere prospect of that has investors on edge."
Analysts Warn of Further Declines
Market commentary on bitcoin's sell-off has been grim. John Blank, chief strategist at Zacks Investment Research, warns that the token "could sink all the way to $40,000 — about 45% below current levels." He also highlighted "three reasons why the ongoing crypto winter could last for months longer."
Even high-profile investors are taking note. Michael Burry, famous for his role in The Big Short, focused on a trio of "sickening" scenarios that could unfold if bitcoin continues its slide, though he stopped short of predicting specific losses.
What Comes Next for Bitcoin?
For now, bitcoin remains in a precarious position. Analysts point out that "what happens with Strategy, and how far below their market net asset value it can trade, will be top of mind for investors."
At the same time, the crypto market is mainly appealing to traders willing to take high risks. As Business Insider concludes, "Fortune does tend to favor the bold, but you'd have to have serious guts to buy in right now
