Bitcoin and related companies continued their downward trend on Monday, reflecting a broader sell-off in the technology sector that many analysts believe is experiencing overvaluation. The flagship cryptocurrency, Bitcoin, declined by 5.6% after an earlier drop of nearly 12%, ultimately closing just above $86,000. By early Tuesday, Bitcoin was trading around $86,650, marking a substantial decrease of approximately 33% since reaching an all-time high of $126,210.50 on October 6, as reported by the crypto trading platform Coinbase. Bitcoin’s earlier surge had coincided with a favorable market environment and a more supportive stance from U.S. legislators.
Companies facilitating cryptocurrency trading faced significant losses during the sell-off. Notably, Coinbase Global saw a decline of 4.8%, while the online trading platform Robinhood Markets dropped 4.1%. Riot Platforms, a Bitcoin mining company, saw its shares decrease by 4%. Another significant player, Strategy, the largest crypto treasury company focused on bitcoin acquisition, fell by 3.3%. The firm reported holding approximately 649,870 bitcoins, valued at about $55.7 billion as of Monday evening. However, Strategy revised its year-end bitcoin projection downward to between $85,000 and $110,000, a sharp decrease from an earlier forecast of $150,000.
American Bitcoin, in which Eric Trump and Donald Trump Jr. are investors, experienced a staggering 15.6% plunge, marking a nearly 47% reduction in value since September 30. Other cryptocurrency ventures linked to the Trump family also saw declines. For example, the market valuation of the World Liberty Financial token, or $WLFI, decreased from over $6 billion in mid-September to roughly $4.14 billion. Additionally, the price of the $TRUMP meme coin fell from an asking price of $45 prior to Trump’s inauguration to just $5.70.
Investing in Bitcoin through spot bitcoin ETFs (exchange-traded funds) remains popular, allowing investors to gain exposure without actually owning Bitcoin directly. However, November witnessed a significant outflow of $3.6 billion from these ETFs, marking the largest monthly withdrawal since their inception in January 2024. Bitcoin futures also haven’t fared well, dropping nearly 24% over the past month, while gold futures have risen almost 7%.
Analysts attribute the cryptocurrency sell-off to an array of factors, including an overall risk-averse sentiment in the markets that has prompted investors to gravitate toward safe-haven assets like bonds and gold. In a recent research note, Deutsche Bank analysts pointed to institutional selling, profit-taking by long-term holders, and a more hawkish stance from the Federal Reserve as catalysts for the downturn. Stalled crypto regulation has added to the uncertainty, leading to speculation about the nature of the current market conditions—whether this represents a temporary correction or a more extended adjustment phase.
On the regulatory front, the crypto industry saw some positive movement in July when regulations aimed at providing consumer protections for stablecoins were signed into law. However, efforts to establish a comprehensive market structure for cryptocurrencies have stagnated in the Senate. This legislation has been a primary goal for the crypto sector, which has invested heavily in political campaigns to secure favorable conditions for its growth in Washington.
