Bitcoin dropped below the significant $70,000 mark on Thursday, continuing a decline without signs of recovery. It fell by 3.8% to a low of $69,858, the lowest since November 2024. This week’s decline brings Bitcoin’s losses to nearly 8%, and it has fallen almost 20% this year. Ether also decreased nearly 2% to $2,090, down close to 30% this year.
Analysts believe the recent downturn in cryptocurrencies was sparked by the nomination of Kevin Warsh as the next Federal Reserve Chair, which raised fears that he might reduce the Fed’s balance sheet. Historically, cryptocurrencies have benefited from a larger balance sheet that supports speculative assets due to increased liquidity. Analysts noted that “the market fears a hawk” under Warsh’s control, suggesting a smaller balance sheet would negatively impact crypto.
The total value of the global crypto market has decreased by nearly $1.9 trillion since reaching a peak of $4.379 trillion in early October. A recent crash last October had already diminished investor interest in digital assets, and strong outflows from institutional ETFs indicate growing pessimism about crypto. Research showed U. S. spot Bitcoin ETFs experienced over $3 billion in outflows in January alone.
Additionally, Bitcoin’s price movements have been linked to the overall technology sector, and the recent decline in software stocks has contributed to the drop in cryptocurrency values. Concerns are rising regarding potential forced liquidations among crypto miners if prices continue to fall, which could further exacerbate the situation.
With information from Reuters
