Bitcoin experienced a significant plunge on Thursday, with its decline accelerating amid weakening risk sentiment across global financial markets. The world's largest cryptocurrency fell to a low of $66,675.12, marking its weakest level since October 2024. This represents a substantial downturn for the digital asset, which has faced mounting pressure from multiple market forces in recent weeks.
Market Capitulation and Broader Crypto Decline
The cryptocurrency market appears to be entering what analysts describe as "full capitulation mode." According to CoinGecko data, the global crypto market has lost approximately $2 trillion in value since reaching its peak of $4.379 trillion in early October. Remarkably, about $800 billion of that loss has occurred within the last month alone, indicating accelerating downward momentum.
Bitcoin has fallen 11% for the current week, bringing its year-to-date losses to 23%. Meanwhile, Ether, the second-largest cryptocurrency by market capitalization, declined more than 7% to $1,973 on Thursday. Ether has experienced even steeper declines, falling nearly 14% this week and approximately 34% so far this year.
Multiple Factors Driving the Selloff
The cryptocurrency decline coincides with broader market turbulence affecting multiple asset classes. Precious metals, particularly silver and gold, have become increasingly volatile due to leveraged buying and speculative flows. Silver, for instance, fell as much as 16.6% to a low of $73.41, contributing to the overall risk-off sentiment.
In equity markets, the S&P 500 slid to near two-week lows, while the Nasdaq sank to its lowest level in more than two months. The artificial intelligence theme, which had previously driven investor enthusiasm, came under renewed pressure, further impacting technology-related assets including cryptocurrencies.
Institutional Withdrawals and Regulatory Concerns
Analysts point to substantial institutional withdrawals as a primary driver of the cryptocurrency downturn. Deutsche Bank analysts noted in a client report that massive withdrawals from institutional exchange-traded funds have significantly impacted the market. These funds have experienced billions of dollars in outflows each month since the October 2025 downturn.
U.S. spot bitcoin ETFs witnessed particularly concerning outflows, with more than $3 billion withdrawn in January alone. This followed outflows of approximately $2 billion in December and $7 billion in November, indicating a sustained pattern of institutional disengagement from cryptocurrency investments.
Federal Reserve Appointments and Market Reactions
Political developments have also contributed to market uncertainty. The selection of Kevin Warsh as the potential next Federal Reserve chair by President Donald Trump has fueled concerns among cryptocurrency investors. Market participants worry that Warsh might pursue policies to shrink the Fed's balance sheet, potentially removing a key support mechanism for speculative assets like cryptocurrencies.
Cryptocurrencies have historically benefited from expansive monetary policies and large central bank balance sheets, which provide liquidity to financial markets. The prospect of reduced monetary support has created additional headwinds for digital assets already facing significant selling pressure.
Broader Implications and Market Structure Concerns
The cryptocurrency decline has extended beyond token prices to impact companies holding bitcoin and other digital assets. This spreading market turmoil raises concerns about potential contagion effects within the broader financial ecosystem.
Market analysts are increasingly questioning whether the current decline represents a temporary correction or the beginning of a more prolonged downturn. Jefferies strategist Mohit Kumar highlighted concerns about crypto miners potentially facing forced liquidations if prices continue to fall, which could create a vicious cycle of selling pressure.
Kumar emphasized that while cryptocurrencies should represent only a small portion of investment portfolios, their widespread ownership among retail investors adds to overall market risk. This dynamic creates additional volatility as individual investors react to price movements and market sentiment shifts.
Historical Context and Future Outlook
The current cryptocurrency downturn follows a record crash in October that sent bitcoin tumbling from its peak as leveraged positions were liquidated. This previous volatility has left investors increasingly cautious about digital assets, with sentiment toward the industry remaining fragile.
Investment analyst Nic Puckrin of Coin Bureau suggested that based on previous market cycles, the current situation may represent more than a short-term correction. Instead, it could signal a transition from distribution to reset phases, which typically unfold over months rather than weeks.
As market participants assess the evolving landscape, questions remain about the future trajectory of cryptocurrency values and their relationship to broader financial markets. The interconnectedness between digital assets, technology stocks, and traditional financial instruments continues to create complex dynamics that challenge investors and analysts alike.
