Just when Bitcoin looked like it was starting to establish itself as a serious asset class, it crashed all over again. Last year, the success of spot Bitcoin exchange traded funds (ETFs), growing institutional enthusiasm and a broader appetite for risk powered the leading cryptocurrency to all-time highs under the friendly eye of US President Donald Trump.
The high point came last October, when the price hit $126,500. Bitcoin investors were buzzing, with talk of it flying to $200,000 and beyond. Then it all unraveled, crashing by 50 per cent to a low of $63,326 on February 24, wiping out $1.2 trillion in value. February marked its fifth monthly loss in a row, down 15 per cent, while altcoins like Ethereum and smaller tokens took an even bigger battering. So, are we witnessing Bitcoin’s decline into irrelevance, or a brilliant buying opportunity?
There’s nothing new about volatility. That’s probably its defining feature, but recent plunges have shattered the notion that Bitcoin is digital gold, a safe-haven asset where people can park their wealth and sleep tight. So what triggered the sell-off?
Institutional investors were enthusiastic buyers throughout 2025, only to lose appetite for risk and become sellers. Sticky inflation, US tariffs, geopolitical tensions and talk of an artificial intelligence bubble sparked a flight to more traditional safe havens.
The fading Trump effect is also a factor. Last year’s rally was partly inspired by his political endorsement, inflating expectations. As broader market risk appetite cooled, some of that premium unwound.
Rachael Lucas, crypto analyst at BTC Markets, says wider economic worries drove investors out of speculative assets and triggered a wave of forced liquidations as key technical support levels crumbled. “Liquidations exceeded hundreds of millions of dollars as Bitcoin broke key support, triggering a cascading sell-off across derivatives markets. Outflows from spot Bitcoin ETFs added direct selling pressure during an already fragile liquidity period.”
To add insult to injury, physical gold has been rocketing too, hitting an all-time high of $5,600 an ounce in late January, before retreating slightly. “Bitcoin failed to respond to typical safe-haven triggers, with its price decline revealing its sensitivity to liquidity shocks rather than defensive demand,” says Ms Lucas.
She argues that Bitcoin may still work as a long-term hedge, but investors can no longer expect it to mirror gold during market stress.
Bitcoin has a history of dramatic boom-and-bust cycles. Crashes have taken it down as much as 75 per cent before recovering to new highs. Today’s panic may be overdone, Ms Lucas adds. “Evidence of base-building and stabilisation after liquidation cascades indicates the market may not yet be entering an extended crypto winter.”
The arrival of ETFs has been a mixed bag for Bitcoin. They allow investors to gain exposure without holding crypto directly, offering the comfort of regulated structures and familiar brokerage interfaces.
Kyle Rodda, senior financial market analyst at Capital.com, says ETFs have had a massive impact, as they now dominate retail crypto investing. “This trend could continue as they offer simpler, regulated access and reduce the risk of security breaches. But it will make crypto highly sensitive to price swings.”
This may have amplify recent declines but could also revive Bitcoin at speed once wider confidence returns, says Chris Beauchamp, chief market analyst at IG. “Bitcoin surged over 5 per cent after avoiding a breakdown below $60,000, tempting flows back on hopes of a recovery.”
On March 2 alone, as global stock markets tumbled following the US attack on Iran, it jumped 5.8 per cent to $69,455, just shy of $70,000. Next day, it retreated below $67,000. It is now at a similar level, amid increased volatility.
ETFs and structured products have had another impact on crypto, by allowing traders to hedge their positions, re-entering Bitcoin gradually rather than exposing themselves to outright risk, says Sean Dawson, head of research at Derive.xyz. “The crypto market is now beginning to show early signs of stabilisation, with derivatives positioning suggesting traders are quietly preparing for a recovery while maintaining downside protection.”
Volatility has settled back into the 50 per cent range, historically associated with consolidation rather than panic selling, he adds. “Options positioning suggests bullish traders are eyeing $85,000 to $95,000 over the coming month as liquidity stabilises.”
On the bearish side, levels of $60,000 and $55,000 indicates any drawdown may remain contained rather than trigger a capitulation.
Taken together, Mr Dawson says this points toward a market attempting to form a base. “Traders are transitioning away from defensive panic toward conditional optimism, preparing for upside while remaining protected against another leg lower.”
Simon Peters, crypto analyst at eToro, says much will also depend on US economic data. If the US Federal Reserve looks set to cut interest rates, crypto should get a lift. Accelerating institutional engagement may help power it higher in the longer run, he adds.
“Citibank announced plans to integrate Bitcoin into its core banking systems, aiming to make the asset ‘bankable’. Barclays in the UK is exploring blockchain platforms for stablecoin payments and tokenised deposits. These developments highlight the continued convergence of traditional finance and digital assets.”
David Belle, founder of trading platform Fink Money, says the sell-off may have been brutal, but Bitcoin has behaved as it always does, being highly volatile with big upside. “In two years, some will probably regret not buying at today’s prices. If you believe in Bitcoin and cryptocurrencies more widely, now could be a once-in-a-lifetime opportunity to buy at a serious discount.”
Michele Tieghi, founder of PsyFi Money, argues recent drops might even be the perfect time for beginners. “Investing when prices are low reduces timing risk and increases the opportunity for gains. Spread purchases over time, and view your investment as a long-term commitment.”
She recommends limiting crypto exposure to a maximum of 3 per cent to 5 per cent of an overall portfolio. “Only invest what you can afford to lose, as the market can change rapidly.”
Buyers should beware aggressive marketing, which are the hallmark of “pump-and-dump schemes” where an asset is artificially hyped before insiders sell, causing prices to collapse. “If a coin emerges from nowhere and suddenly dominates social media, consider it a red flag,” Ms Tieghi says.
As always with investing, the decision to buy Bitcoin is highly personal. Nobody can forecast with any certainty where it will go next or whether it will survive. The only certainty is volatility, so only invest if you can handle that – and are prepared to lose every cent.
