Bitcoin has fallen sharply, dropping below $70,000 for the first time since November 2024, wiping billions from the global cryptocurrency market. The leading digital asset lost nearly 8% in the past week and is down almost 20% for the year so far.
The sell-off was triggered by the nomination of Kevin Warsh as the next Federal Reserve chair, according to analysts. Markets expect Warsh may shrink the Fed's balance sheet, removing liquidity that had supported speculative assets like cryptocurrencies. 'The market fears a hawk with him,' said Manuel Villegas Franceschi of Julius Baer. 'A smaller balance sheet is not going to provide any tailwinds for crypto.'
Ether also fell, trading near $2,090, down roughly 2% on the day and close to 30% lower for the year. The global crypto market has lost nearly $1.9 trillion since its peak of $4.379 trillion in early October, with some $800bn wiped out in the last month alone.
Deutsche Bank analysts attributed the decline to massive withdrawals from institutional exchange-traded funds (ETFs). U.S. spot bitcoin ETFs saw outflows of more than $3bn in January, following $2bn and $7bn in December and November respectively. 'This steady selling ... signals that traditional investors are losing interest,' they said.
Bitcoin has also been hit by a broader tech stock rout, as its price often moves in tandem with enthusiasm for artificial intelligence. Jefferies strategist Mohit Kumar warned of possible forced liquidations among crypto miners if prices continue to fall, which 'could lead to a vicious cycle.'
