The value of the cryptocurrency Bitcoin is in free fall. Last October, Bitcoin was trading around $126,000. After trading as low as $59,000 last week, it is now meandering around the $60,000 to $61,000 level. This punishing drawdown has destroyed over $200 billion in market capitalization. What makes the sharp decline in Bitcoin more painful is that while the cryptocurrencies, including Bitcoin, have been falling like rocks, United States equities have been enjoying a blistering rally. To illustrate, even though the Nasdaq Composite fell by 4% last Friday, it remains up around 11% from the start of the year. The Bitcoin crash is being driven by five main factors.
First, a major institutional investor in Bitcoin, Strategy, formerly MicroStrategy, sold a small portion of its $2 billion position in the currency. That was the first sale by Strategy in 4 years. The sale unnerved many Bitcoin investors, especially because the executive chairman of Strategy, Michael Saylor, had previously said that he would never sell Bitcoin.
Second, the slow bleed in the price of Bitcoin from its Oct. 2025 high has caused many investors in Bitcoin Exchange Traded Funds, ETFs, to sell. People don’t like to lose money. Bitcoin is a relatively new asset, and sustained falls in the price create a cascade of selling.
