The world’s leading digital currency collapsed on Thursday, plunging to its weakest point in nine months as investors fled risky assets amid turmoil in technology stocks and precious metals markets.
Bitcoin tumbled to $63,295.74, marking its lowest price since October 2024, just weeks before Donald Trump’s presidential victory. The Republican candidate had promised to champion cryptocurrency policies during his campaign. By Thursday’s close, the token traded at $63,525, representing a 12.6% single-day decline, the steepest drop in over two years.
Trading platforms recorded approximately $1 billion in forced liquidations over a 24-hour period, according to CoinGlass analytics.
Unprecedented Market Destruction
Since reaching an all-time high of $4.379 trillion in early October, the worldwide digital asset ecosystem has shed $2 trillion in total value, data from CoinGecko reveals. In just the past 30 days alone, $800 billion evaporated from the market.
Bitcoin’s weekly performance shows a devastating 17% retreat, pushing year-to-date losses to 28%.
Meanwhile, Ethereum, the second-largest digital currency, dropped over 13% to trade at $1,854 on Thursday evening. The token has surrendered 19% of its value this week and nearly 38% since January began.
Contagion From Traditional Markets
The cryptocurrency collapse mirrors broader financial market chaos. Precious metals experienced wild swings as leveraged traders and speculators drove extreme volatility. Silver prices crashed as much as 18%, bottoming at $72.21.
Traditional equity markets suffered parallel losses. The S&P 500 hit a seven-week nadir, while the Nasdaq touched its weakest level in over 60 days as artificial intelligence enthusiasm cooled dramatically.
“The crypto market has entered complete capitulation,” observed Nic Puckrin, investment analyst at Coin Bureau. “Based on historical patterns, we’re witnessing a fundamental market reset rather than a brief pullback. These transitions typically require months to resolve, not weeks.”
Companies with significant digital asset holdings saw their stock prices battered, suggesting the crisis extends beyond cryptocurrency prices themselves.
Central Bank Leadership Sparks Anxiety
President Trump’s nomination of Kevin Warsh to lead the Federal Reserve has intensified selling pressure, market observers note. Traders anticipate Warsh may pursue aggressive balance sheet reduction policies.
Digital currencies historically benefited when the Fed maintained an expansive balance sheet and flooded financial markets with liquidity, providing crucial support for speculative investments.
“Markets view him as aggressively hawkish,” explained Manuel Villegas Franceschi, analyst at Julius Baer. “Balance sheet contraction removes a critical support mechanism for cryptocurrency valuations.”
Mass Exodus of Professional Investors
Digital assets have faced persistent headwinds following October’s dramatic reversal, which forced highly leveraged positions to unwind. The collapse left professional investors wary and market sentiment deeply fragile.
“The current downturn stems primarily from enormous outflows through institutional exchange-traded funds. These investment vehicles have experienced multi-billion dollar redemptions monthly since October’s crash,”Deutsche Bank strategists wrote to clients.
American bitcoin ETFs recorded over $3 billion in withdrawals during January alone, following $2 billion and $7 billion in outflows throughout December and November.
“This sustained selling demonstrates waning institutional appetite and mounting skepticism toward the entire cryptocurrency sector,” the analysts concluded.
Technology Correlation Deepens Pain
Bitcoin prices have tracked technology sector performance closely in recent years, particularly benefiting from artificial intelligence investment excitement.
This week’s global rout in software and tech stocks accelerated cryptocurrency depreciation across the board. Analysts now debate whether current losses signal the beginning of a more severe correction phase.
“Growing concerns surround cryptocurrency mining operations and potential forced asset sales if prices continue deteriorating, potentially triggering a downward spiral,” warned Mohit Kumar, strategist at Jefferies.
“We’ve consistently maintained that crypto should represent only a minimal portfolio allocation. Nevertheless, retail investors own these assets heavily, amplifying overall market vulnerability,” Kumar added.
Recovery Timeline Uncertain
The convergence of institutional money withdrawal, technology sector weakness, and impending Federal Reserve policy shifts has created hostile conditions for digital currencies. Market experts warn that meaningful recovery could require several months based on previous cycle patterns.
For investors, the sharp reversal underscores the extreme volatility inherent in cryptocurrency markets and their increasing correlation with traditional risk assets. The path forward remains unclear as both retail and institutional participants reassess their exposure to digital currencies.
