Bitcoin Briefly Erases All 2026 Gains Amid Market Uncertainty
The cryptocurrency market experienced significant turbulence this week as Bitcoin briefly wiped out all gains accumulated since the beginning of 2026. This development marks only the third year of negative annual returns for the digital asset over the past decade, highlighting the ongoing volatility that continues to challenge investors.
Major ETF Outflows Signal Investor Caution
Data compiled by Bloomberg reveals that investors withdrew approximately US$490 million from around a dozen U.S.-listed Bitcoin ETFs on Tuesday alone. This substantial capital movement occurred against a backdrop of global financial market selloffs and escalating geopolitical tensions that have shaken investor confidence across multiple asset classes.
"Positive ETF flows last week accompanied higher prices, however, outflows dominate this week," explained Adam Morgan McCarthy, senior research analyst at blockchain data firm Kaiko. "This suggests at least one headwind in terms of holding above this level."
Price Volatility and Technical Analysis
Bitcoin experienced dramatic price swings throughout the trading period, falling as much as 2.4 per cent to US$87,188 earlier Wednesday before rebounding to the closely watched US$90,000 level. The cryptocurrency had closed at US$87,648 on December 31, 2025, capping a 6.5 per cent slide for that year. At one point last week, Bitcoin had been up as much as 12 per cent since the start of 2026.
"Bitcoin is falling as capital flees from risky assets," noted Alex Kuptsikevich, chief market analyst at FxPro. He added that investors should "be prepared for an imminent test of necessary medium-term support in the US$80,000 to US$84,000 range, where Bitcoin was bought in November and December."
Collapse of Cash-and-Carry Trading Strategy
The digital asset's price fluctuations coincide with the collapse of the cash-and-carry trade, a strategy where institutions purchased spot Bitcoin while simultaneously selling futures contracts to capture pricing gaps. According to data compiled by Amberdata, one-month annualized yields are currently hovering around five per cent, representing some of the lowest levels observed in years.
Market Structure Shifts and Geopolitical Influences
Open interest in Bitcoin futures on the Chicago Mercantile Exchange has slipped below Binance's for the first time since 2023, signaling a potential shift in market structure. Crypto exchanges like Binance serve as the primary venue for perpetual futures contracts, which account for the largest trading volumes in the cryptocurrency market.
The market volatility was further exacerbated by geopolitical developments, including statements from former President Donald Trump regarding trade relations with European nations. Bitcoin initially rebounded from daily lows following Trump's announcement that the United States would refrain from imposing tariffs on goods from European nations opposing his efforts regarding Greenland.
This market turbulence underscores the continuing sensitivity of cryptocurrency prices to traditional financial market movements, regulatory developments, and global geopolitical events. As institutional participation in cryptocurrency markets grows through vehicles like ETFs, these traditional market influences appear to be exerting increasing pressure on digital asset valuations.
