Bitcoin tumbled below the critical $70,000 psychological mark on Thursday, reaching this level for the first time in 15 months. A global sell-off in risk assets has pushed the world's largest cryptocurrency into a fresh downward trajectory.
According to Shiliang Tang, Managing Partner at Monarq Asset Management, the market is currently experiencing a "crisis of confidence." The $70,000 level is viewed as a significant psychological barrier, particularly given the current administration's pledge to strengthen U.S. leadership in the digital asset space. Consequently, some market observers believe that breaching this support could trigger more substantial selling pressure in the short term.
During pre-market trading on Thursday, Bitcoin hit a low of $69,821. Since peaking last October, Bitcoin has fallen more than 44% and is now hovering near its lowest level since Donald Trump's election victory in November 2024. Meanwhile, the total market capitalization has shed $1.7 trillion from its peak last October, with over $460 billion lost in the past week alone.
Data from Coinglass shows that liquidations of long positions across various tokens totaled $7.22 billion over the past 24 hours. Wenny Cai, Chief Operating Officer at trading platform SynFutures, noted that the massive scale of liquidations indicates a shift towards risk aversion, with price movements now driven more by balance sheet mechanisms than narrative logic.
Bitcoin's role as a hedge against market pressure is facing increasing skepticism. The token is down nearly 20% year-to-date, while global equity markets only began a synchronized sell-off on Wednesday, with the Nasdaq 100 Index falling over 2%. Asian and European stocks extended declines on Thursday.
Has the breach of a key psychological level plunged Bitcoin into a "downward spiral"? The $70,000 price point carries significant political and psychological weight. It was the trading level for Bitcoin prior to the U.S. election, marking the starting point of the crypto rally triggered by Trump's victory. As previously reported, Citigroup analysts noted that crypto advocates were enthusiastic donors in the election, and the current administration has committed to bolstering U.S. leadership in digital assets, even establishing a strategic Bitcoin reserve.
According to CoinMetrics data, Bitcoin briefly fell to a low of $69,821 around 6:27 AM ET on Thursday before rebounding above $70,000. Some market watchers suggest that falling below $70,000 could precipitate a larger wave of selling.
Andrew Tu, Head of Business Development at crypto market maker Efficient Frontier, stated that sentiment in the cryptocurrency market is currently in a state of extreme fear. "If Bitcoin fails to hold $72,000, it is highly likely to drop to $68,000, and could potentially retreat to the lows seen after the initial rally in early 2024."
Maja Vujinovic, CEO of digital asset firm FG Nexus, told CNBC, "The straight-line bull market that many expected hasn't really materialized. Bitcoin is no longer trading on hype; the story has lost some of its plot. It is now trading purely based on liquidity and capital flows."
Institutional capital continues to flow out, with hawkish signals from Wash exacerbating selling pressure. Unlike equity markets, Bitcoin and other cryptocurrencies have been declining for months. Fund flows for U.S.-listed Bitcoin exchange-traded funds remain volatile, indicating a significant reversal in institutional demand.
According to Bloomberg compiled data, after recording approximately $562 million in net inflows on Monday, these ETFs saw outflows exceeding $800 million over the next two trading days. A CryptoQuant report on Wednesday indicated that U.S. ETFs, which purchased 46,000 Bitcoins during the same period last year, had turned into net sellers in 2026.
So far this week, liquidations of both long and short cryptocurrency positions have exceeded $2 billion. Analyst Wenny Cai commented, "This does not signal the end of institutional participation, but it certainly marks the end of complacency."
Furthermore, Trump's nomination of Wash as the next Federal Reserve Chair on January 29 triggered a 5.5% single-day drop in Bitcoin, followed by a 7.1% plunge on January 31—the largest single-day decline since January 2018. Wash is known for supporting higher real interest rates and reducing the balance sheet.
