Since January 1, the queen of cryptos is down 17%. It is worse for the others: ether (ETH) down 27%, Solana (SOL) down 26%, Binance Coin (BNB) down 19%, and XRP (XRP) also down 19%. A rout.
The bitcoin fell to its lowest level since President Donald Trump returned to the White House a little over a year ago, dropping back below $70,000 on Thursday, after touching $126,000 last October.
To understand what is going on, it helps to step back. This drop is explained by mechanisms already observed several times in recent years in cryptocurrencies. Bitcoin, and more broadly the entire crypto market, has historically been highly sensitive to the macroeconomic backdrop.
When the environment is supportive-low interest rates, no geopolitical tensions and relaxed traditional financial markets-all the ingredients are in place for bitcoin to take off. This is what is known as a "risk-on" environment. In other words, in such periods investors tilt more toward so-called "risky” assets-that is, the most volatile ones, such as cryptocurrencies.
Money supply x Bitcoin
MacroMicro
However, risk aversion has resurfaced in recent months. The start of bitcoin's slide (from its $126,000 peak in October 2025) began amid a full-blown diplomatic escalation between the United States and China. In early October, Beijing announced strict controls on rare-earth exports, in retaliation for Washington's fresh tariff threats. On October 10, fears of a trade war between the two superpowers triggered a flash crash across global markets: the Nasdaq 100-a bellwether for US tech stocks-fell 3.56% in a single session, its worst performance since spring, while bitcoin, highly correlated with technology shares, buckled sharply in its wake. It never really recovered.
The shockwave hit all risk assets: cryptocurrency market capitalisation shrunk by about $400bn in 24 hours, an all-time record, driven by a cascade of liquidations in leveraged positions. The same day, Wall Street saw $2 trillion evaporate from US equities, underscoring the scale of the panic.
The October turbulence was compounded by an uncertain economic and monetary backdrop. In the United States, the budget shutdown halted the publication of official macroeconomic indicators for more than 40 days, forcing investors and the central bank to steer by sight through a statistical fog. At the same time, US inflation began accelerating again at year-end, and the stratospheric equity valuations of artificial-intelligence champions fuelled fears of a speculative bubble-fears that remain palpable at the start of 2026. Overall, investors lump cryptos and technology stocks into the same "risk" bucket. In other words, when tech wobbles, bitcoin falls with an amplifying effect, sometimes doubled, or even tripled.
On the spot Bitcoin ETF front-which played a major role in supporting bitcoin's price since their launch in 2024-the party is over as well. Total assets in these listed products have dropped from $169.5 billion last October to $93.5bn today. More than $75bn has evaporated from these bitcoin-backed exchange-traded index funds. That reflects a sharp "risk-off” move among institutional investors.
SoSo Value
Companies exposed to cryptos-the pure players-have not been spared. On the stock market, sector names have nosedived in the wake of the crash, as shown by Coinbase, the leading listed US exchange, which is down 32% since January 1 (down 50% since October), while investment firm Strategy-known for its bitcoin treasury-saw its shares fall 26% over the period (down 60% since October).
This sudden reversal comes after two years of near-uninterrupted euphoria in crypto assets. From early 2023 to autumn 2025, bitcoin's price was multiplied by nearly 6, driven by unprecedented enthusiasm from retail and institutional investors.
Several factors fuelled this spectacular rise. On the one hand, new US regulations were expected to be more favourable to crypto-with President-elect Donald Trump promising to make the United States the world's "crypto-capital”, while appointing pro-Bitcoin figures to key posts-which boosted market confidence. On the other hand, institutional appetite played a major role: the early-2024 approval of several spot Bitcoin ETFs in the United States opened the floodgates to massive capital inflows into the sector.
The macroeconomic environment also favoured crypto during that bullish phase. After a difficult year in 2022, the US Federal Reserve eventually began cutting rates from 2024, as inflation slowed.
In addition, supportive narratives-such as the programmed scarcity of the crypto asset (the April 2024 halving) and the fleeting appeal of decoupling from traditional markets-convinced new entrants to position themselves in bitcoin as an alternative store of value.
More broadly, this crash marks a pivotal sequence for the crypto ecosystem. On the one hand, it has highlighted cryptocurrencies' growing dependence on global macroeconomic conditions. Unlike the 2022 crypto winter (precipitated by internal scandals such as FTX or Terra/Luna), the 2025 rout-which is therefore continuing into 2026-did not originate from a failure within the sector itself: no major fraud or platform collapse came to explain the slide. In fact, on the Bitcoin network, no incident, no slowdown, no technical "bug” explains the fall in prices. Blocks continue to be validated every ten minutes, computing power remains near its all-time highs and transactions are recorded with the same regularity as during euphoric periods.
External forces-monetary policy, geopolitical tensions, equity-market sentiment-set the tone. In short, bitcoin behaved like just another risk asset, sensitive to the same fears that hit the Nasdaq or technology stocks.
On the other hand, the crisis served as a full-scale test of the crypto market's new infrastructure, with rather reassuring results. Bitcoin ETFs, for example, did their job without major hiccups: despite heavy redemptions, these funds were able to meet client withdrawals smoothly, thanks to the authorized participants mechanism, which absorbed selling without creating dislocations. No forced closures or prolonged suspensions were reported for these vehicles, evidence of a certain maturity gained by the industry.
For investors and companies in the sector, the watchword is renewed caution. The most optimistic argue that this purge of speculative excess was probably necessary to restart on healthier foundations: weak hands have capitulated and leveraged positions have been washed out. As evidence, the levels of selling on the Bitcoin network in recent days have not been seen since 2023. More than $4.6bn in losses were recorded on January 23, and more than $6bn over the past three days.
Glassnode
The final word: this is less a structural rethink than a classic market move, in which the search for safety trumps long-term conviction. With some distance, the perspective shifts dramatically: despite the current shocks, bitcoin is still up about 220% over three years, versus 67% for the S&P 500.
