Bitcoin’s value has fallen sharply, leaving many investors wondering if they acted too hastily during the cryptocurrency’s post-election surge.
Following the U.S. presidential election, a wave of new investors poured into Bitcoin at high prices. However, just weeks into the new administration, the cryptocurrency entered a bear market, influenced by a sell-off in global stocks. After reaching a six-figure all-time high, Bitcoin is now trading around $80,000, a drop of nearly 25% from its January peak.
According to crypto data and analytics firm Glassnode, at least 20 million new Bitcoin addresses have been created in the past three months, representing about 1.5% of all existing addresses. The spent output profit ratio, which compares the buying and selling prices of new Bitcoin, has fallen to 0.95, its lowest point in over a year and negative for the first time since October, according to estimates from crypto exchange Bitfinex.
“This suggests that recent buyers are locking in significant losses, reinforcing the exceptionally challenging conditions for newer investors,” stated analysts at Bitfinex.
Bitcoin hit a record high of $109,071 in January but has since given up most of its gains. The crypto market’s decline is attributed to worries about U.S. tariff policies, the world’s economic health, and a tech selloff that has decreased risk appetite. Kevin Dede, an analyst at H.C. Wainwright, expressed surprise at seeing Bitcoin at $80,000, suggesting the downturn may not be over.
Even President Donald Trump’s executive order to establish a Bitcoin strategic reserve and stockpile other crypto tokens gave the market only a short-term boost. John Glover, chief investment officer of crypto lending platform Ledn, noted that the asset could find support at the $73,500 level.
Leveraged traders are facing significant losses, a situation highlighted by Bitfinex analysts. The overall losses for this group are hovering above $800 million per day, with February 28 and March 4 experiencing some of the largest single-day losses. Additionally, investment products that track digital assets experienced outflows for the fourth consecutive week, according to CoinShares data, with total assets under management decreasing by about $4.75 billion to $142 billion, its lowest value since November 2024 following the U.S. election.
J.P.Morgan reported that U.S. spot Bitcoin ETFs saw outflows totaling around $1.1 billion on February 25, the largest daily outflow since their launch in January last year. Bitcoin may currently be affected by broader market trends. The current implied volatility of Bitcoin derivatives has spiked to 69%, while the implied volatility of ether has increased from 65% to 90% since Monday, according to Amberdata, signaling investors expect more volatility going forward.
Jeff Dorman, chief investment officer at asset manager Arca, noted that the recent market activity has “100% been driven by the equity market tantrum.””, adding that this situation is likely to “play out similar to what we saw in late 2018, which was nothing more than a short-term hiccup on the way to further highs.”
