Investors are withdrawing funds from Bitcoin exchange-traded funds (ETFs), technical indicators are weakening, and interest rate expectations are shifting. Griffin Arden, co-founder of multi-asset management firm Primal Fund, stated that there is still room for further declines, and the market is far from a true bottom.
The recent sell-off in Bitcoin stems in part from Strategy (MSTR) selling a small portion of its Bitcoin holdings. This reduction by the world’s largest corporate holder of Bitcoin has broken its previous narrative of “never selling Bitcoin.” Although Strategy purchased 1,550 Bitcoins on Monday for approximately $101 million — far exceeding the previous sale of around $2.5 million — market confidence may not be easily restored.
Bitcoin fell below $60,000 last Friday, hitting its lowest level since October 2024, and has now retreated more than 50% from its all-time high of over $126,000 last year. Last week, Bitcoin fell 16%, marking its worst weekly performance since the collapse of FTX in 2022.
Technical signals are also deteriorating. Last week, Bitcoin fell below its 200-week moving average — a key support level whose breach often heightens cautionary sentiment, suggesting that the market is more likely to face selling pressure during any rebound. Arden noted that true market bottoms are usually accompanied by a more pronounced bullish tilt in long-term options, but such a sign has not yet appeared. U.S. spot Bitcoin ETFs have seen net outflows for 13 consecutive trading days, with total outflows reaching approximately $5.5 billion.
Paul Howard, senior director at cryptocurrency trading firm Wincent, refers to the current market as a “silent bear market” because there has been no major collapse like FTX. He said that falling below the 200-week moving average provides an important confirmation signal that the market may be entering a bear market phase. Given that Bitcoin’s volatility remains high, this rebound is unlikely to be sustained.
The shift in interest rate expectations is also part of the problem. The unresolved U.S.-Iran war, along with strong U.S. jobs data, has shifted market expectations from Fed rate cuts to repricing the possibility of rate hikes. As expectations for higher borrowing costs grow, funds are moving out of high-risk assets such as cryptocurrencies.
Bitcoin is currently down about 50% from its peak, whereas declines in previous bear markets have often approached 80%. After peaking in 2021, Bitcoin took more than a year to truly bottom out, and then another 15 months to return to its highs. Hayden Hughes, managing partner at Tokenize Capital, said that digital asset treasury companies like Strategy are creating unique risks for the crypto industry, as they may be forced to sell assets if financing conditions tighten or their stock prices fall. Hughes pointed out that equity markets may face systemic risks in the coming months, which could further transmit to the cryptocurrency market. Although the current decline in Bitcoin has not yet reached historical bear market levels, the key word is “not yet” — meaning there is still potential for further downside.
