Bitcoin has experienced a significant downturn this January, recording a decline of 5.53%, marking its worst performance for the month since 2022. Should the cryptocurrency fail to rally over the upcoming weekend, it will face its fourth consecutive monthly loss, as reported by CoinGlass. This streak of losses illustrates the longest consecutive downtrend for Bitcoin since 2018, a period infamous for the fallout from a surge in Initial Coin Offerings that plunged the market into a downturn.
Gracy Chen, CEO of Bitget, commented on the current state of the crypto market, attributing the downturn mainly to heightened risk aversion amidst escalating geopolitical tensions. As a result, investors are favoring traditional safe havens over the more volatile digital assets. Chen noted, “This shift reflects broader market behavior where Bitcoin and other risk assets are treated more like high-beta plays tied to risk appetite, while real assets outperform during periods of stress.”
Chen is closely monitoring key indicators, including trading volumes, which could reveal signs of capitulation or a potential rebound. Additionally, she is observing the relative strength index (RSI) readings for oversold conditions that might indicate a stabilization and renewed buying interest in Bitcoin.
Recent data reveals that crypto liquidations have surged to $1.8 billion within the past 24 hours. Bitcoin alone accounted for approximately $792.78 million in liquidated positions, with the majority — around $752.57 million — emanating from long positions. In a notable trend, Bitcoin ETFs experienced a substantial outflow of $817.87 million on Thursday, accumulating total weekly outflows of $978 million, according to SoSoValue.
Analysts from Bitfinex noted that Bitcoin’s price drop has now extended its losses over a six-day streak, one of the most prolonged since November 2024. They emphasized that total liquidations for the day are nearing $800 million and could surpass $1 billion when factoring in less visible on-chain activity. Concurrently, the significant outflows from Bitcoin ETFs indicate increased caution among institutional investors.
Despite the downturn, Bitfinex analysts remarked that the recent dip below $85,000 seems consistent with short-term market fluctuations, as retail buying activity has emerged around $84,000, potentially forming a temporary base. They noted that substantial passive demand remains in the range of $75,000 to $81,000, though the true intent of these bids will only become clear if the price approaches those levels.
Marissa Kim, head of asset management at Abra, expressed her views on the evolving landscape of asset performance since President Trump took office. She posited that asset performance has increasingly been driven by disruptions in traditional monetary and market cycles rather than predictable fundamentals. She further highlighted, “The idea of predictable four-year crypto cycles effectively ended when roughly a quarter of the money supply was created in under two years.”
While some debasement trade assets have performed remarkably well over the past year, Kim pointed out that Bitcoin’s performance has lagged. She suggested that one reason for this discrepancy could be the aftereffects of the flash crash on October 10, which occurred due to a pricing issue on Binance. Many in the industry believe that this incident led to significant losses for several large market makers, prompting them to either exit the markets or curtail their operations.
