Key Takeaways:
- Bitcoin's price dropped below $70,000, fully erasing the speculative rally that followed Donald Trump’s presidential victory.
- Massive capital outflows from Bitcoin ETFs, weakening liquidity, and signs of structural demand fatigue have deepened the correction.
- The crypto market is once again treating Bitcoin as a high-risk asset, far from functioning as a safe-haven under uncertain macroeconomic conditions.
Bitcoin plunged on Thursday, dropping below the $70,000 level and effectively reversing all gains triggered by former President Donald Trump's re-election rally. The largest cryptocurrency by market cap briefly fell 11% to $65,393, marking its lowest price since October 2024.
This sharp decline has erased nearly half of Bitcoin's value from its all-time high just four months ago. The downturn has spilled over into other crypto assets and related ETFs, impacting companies like MicroStrategy that hold large amounts of Bitcoin on their balance sheets.
Chart: Bitcoin price crash (2025–early 2026). The price hit its lowest level since October 2024, showing a steep decline that wiped out previous gains.
End of the Trump Rally and What Triggered the Bitcoin Crash
This downturn marks a sudden reversal following months of strong bullish momentum in 2025. At the time, Donald Trump’s crypto-friendly stance fueled a surge in crypto investor sentiment, driving Bitcoin’s meteoric rise. However, rising geopolitical risk and global financial market jitters have since caused risk appetite to wane. Since mid-January 2026, the Bitcoin price decline has accelerated. Fund redemptions and forced de-leveraging have triggered a self-reinforcing liquidation spiral across the market.
Massive Capital Outflows from Bitcoin ETFs
Throughout 2025, massive inflows into U.S. spot Bitcoin ETFs were a major force supporting Bitcoin’s price. Tens of billions of dollars flowed into these financial products. But this trend has now dramatically reversed:
- Past month: ~$2 billion in net outflows
- Past 3 months: ~$5 billion in cumulative outflows
This reversal from net inflows to outflows has created a structural demand vacuum in the crypto market, removing a major pillar of support and increasing downside pressure on Bitcoin’s price.
Chart: Net capital flows into U.S. spot Bitcoin ETFs [in BTC] — green bars indicate inflows, red bars show outflows, and the black line tracks Bitcoin’s price. Note the spike in red bars from late 2025 into 2026, coinciding with the ongoing price drop. Source: Glassnode.
Signs of Structural Weakness in the Crypto Market
Multiple indicators suggest this Bitcoin crash is not just a technical correction, but rather reflects deeper structural weakness in the crypto market:
- Coinbase Premium has remained negative since October 2025 — a sign that U.S. investors are not actively buying the dip. Historically, sustained bull markets align with strong U.S. spot demand.
- Stablecoin growth has stalled — USDT (Tether) market cap growth turned negative for the first time since 2023, indicating tightening liquidity conditions.
- Diminished long-term demand — Long-term spot demand for Bitcoin has clearly declined from its 2025 peak, suggesting that institutional and retail interest has weakened beyond just leveraged traders exiting.
Bitcoin Options Market: Defensive Positioning and Strong Support
The Bitcoin options market shows traders in defensive mode, with major open interest concentrated around lower strike prices:
Chart: Open interest by strike price for Bitcoin options (blue = calls, yellow = puts). The largest clusters of positions are near $60,000 and $20,000. Source: Deribit.
This data suggests strong support zones near $60,000 and $20,000. If Bitcoin approaches these levels, options market makers are likely to buy spot Bitcoin for hedging, which could help stabilize or even reverse the decline. These technical support levels could therefore act as buffers against further downside.
Bitcoin Still Behaves as a Risk Asset — Not a Safe Haven
This correction also reignites doubts about Bitcoin’s status as a store of value. While Bitcoin is often promoted as an “inflation hedge” or “digital gold,” its recent price action highlights that it continues to behave like a high-beta risk asset. During periods of market stress, institutional investors appear to de-risk by selling Bitcoin, rather than flocking to it as a safe haven.
This trend is especially clear when comparing Bitcoin to high-tech equities or precious metals. In fact, Bitcoin has increasingly mirrored tech stock behavior, undermining the safe-haven narrative.
Chart: Bitcoin (candlesticks) vs. NASDAQ 100 Index (blue line). Bitcoin’s correlation with tech stocks remains strong, suggesting investors view it more like a high-volatility equity than a store of value. Source: xStation5.
As of now, futures markets show little expectation of immediate Fed rate cuts, with the next possible shift priced in for June 2026. This limits potential short-term liquidity injections and weakens the bullish case for Bitcoin under current macro conditions.
Crypto Market Faces Tough Competition for Retail Speculative Capital
The crypto market also faces rising competition for retail speculative capital. From legalized sports betting to political prediction markets and high-yield DeFi products, investors are drawn to a growing number of risk-on instruments.
At the same time, zero-day options (0DTEs) in equities have exploded in popularity, providing high-stakes alternatives for short-term speculation. Retail demand in crypto is being diluted as a result.
Bitcoin Price Analysis: Technical Levels to Watch
Chart: BTC/USD daily price action (late 2025 to early 2026). Horizontal black lines indicate major support levels ($75k, $70k, $65k, $60k). Fibonacci retracement levels (light blue labels) mark 61.8%, 78.6%, and 100%. Orange and blue curves represent the 200-day and 50-day EMAs respectively. Source: xStation5.
Bitcoin is currently testing a key support zone at $65,000, with heavy put open interest around that level. A confirmed breakdown below $65k on a daily close could spark another wave of selling toward the $60,000 region, where institutional players are expected to defend their positions.
Resistance now sits at:
- $70,000–$71,000 (immediate overhead resistance)
- $74,000 (former mid-2025 support now flipped)
- $79,000–$80,000 (critical to reestablish upward momentum)
Until Bitcoin recovers above $80,000 with strong volume, the technical trend remains bearish. Traders are watching for signals of reversal or further breakdown from current levels.
Bitcoin as a High-Beta Tech Asset: Not Digital Gold (Yet)
This correction once again challenges the long-standing “digital gold” narrative. Despite being hailed as a hedge against fiat currency debasement, Bitcoin remains highly correlated with risky tech stocks and does not act as a safe-haven during crises.
While Bitcoin has matured significantly and seen increased institutional adoption, that has also made it more sensitive to macroeconomic shocks and liquidity flows. Rather than decoupling from the traditional financial system, Bitcoin appears to be more integrated into it than ever before.
Final Thoughts: What’s Next for Bitcoin and the Crypto Market?
Bitcoin’s crash below $70,000 marks a critical moment for the crypto market. The combination of ETF outflows, technical breakdowns, tightening liquidity, and shifting investor sentiment could lead to a prolonged consolidation phase.
That said, some technical and on-chain indicators suggest a possible bottoming process:
- Capitulation spikes are near multi-year highs
- Long-term holders are still accumulating
- Exchange balances are declining as coins move to cold storage
Whether Bitcoin stabilizes above $60k or continues lower will depend heavily on:
- Macro conditions (interest rates, inflation, Fed policy)
- Institutional investor flows (return of net ETF inflows)
- Regulatory developments (e.g., passage of the CLARITY Act in the U.S.)
- Market sentiment (can fear subside and buyers return?)
For now, Bitcoin continues to behave as a risk asset, not a safe haven. Until a new bullish narrative emerges or macro tailwinds return, volatility and caution are likely to define the crypto market outlook in early 2026.
