In This Article:
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Bitcoin is in bear-market territory after falling by as much as 23% from its January peak.
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Bitcoin ETF investors pulled more than $1 billion on Tuesday as confidence in crypto dropped.
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Altcoins are also suffering amid risk-off sentiment and a recent crypto-exchange hack.
A stretch of crypto scandals, disappointing policy updates, and one big hack have helped push bitcoin into bear-market territory this week.
The aggressive sell-off has pushed the price of the top token down by as much as 23.4% from January's record price of $109,350. By Wednesday afternoon, bitcoin had fallen to an intraday low of $83,740.
A 20% decline from the latest peak is the technical definition of a bear market, and the sharp drop marks a major turnaround for an asset that just a month ago was shattering records as it rode a wave of bullish momentum.
Several factors have damaged confidence in the crypto sector, sparking investor flight. On Tuesday, spot bitcoin ETFs hemorrhaged a record amount of funds in one day: Data from Farside indicates outflows reached more than $1.1 billion.
"These types of losses rarely end well and I still think the big capitulation is yet to come," Geoff Kendrick, the head of digital assets research at Standard Chartered, said in written commentary on Wednesday.
He had earlier warned that bitcoin's price could drop as low as $80,000, though others have predicted the decline could reach $71,000.
The apex cryptocurrency lost its footing as investors grew disappointed by the Trump administration's early moves. The president ran on a crypto-friendly platform, and traders had hoped for more immediate and aggressive policy actions to uplift the sector.
One of President Donald Trump's earliest crypto actions was creating a meme coin, whose price swings cost some investors millions of dollars. Some industry insiders have expressed dismay at the launch, while others have blamed it for accelerating a meme-coin gambling trend eroding trust in crypto. Several celebrities, and even Argentina's president, Javier Milei, have gotten into hot water for promoting volatile meme coins.
A broad risk-off sentiment is also to blame for bitcoin's slump, made worse by last week's nearly $1.5 billion hack of the crypto exchange Bybit.
Things have been painful for altcoins as well. Matt Mena, a research strategist at 21Shares, said most had erased Trump-led gains.
"The total crypto market cap (excluding BTC, ETH, and stablecoins) peaked at $1 trillion in December but has since fallen to $600 billion," he wrote on Tuesday.