Bitcoin is on track for its fourth annual loss, marking the first time this decline hasn’t been triggered by a major scandal or market crash.
The latest drop occurred on Monday, with Bitcoin plunging as much as 5.2%, leaving the cryptocurrency about 7% lower for the year. Compared with previous down years, this decline is relatively mild, but it comes in a very different environment: institutional adoption is stronger, regulations are more developed, and political backing has emerged, including support from former US President Donald Trump.
Since peaking at over US$126,000 (RM514,773) in early October, Bitcoin has fallen sharply, puzzling investors. Trading volumes are low, interest in Bitcoin ETFs is declining, and derivatives markets show little appetite for betting on a rebound. Even large purchases from prominent investor Michael Saylor’s Strategy Inc haven’t halted the slide.
“Most are surprised by the lack of follow-through despite so many positive catalysts,” said Pratik Kala, a portfolio manager at Apollo Crypto.
Unlike in previous bear markets, Bitcoin’s price movements have now diverged from traditional stocks. While the S&P 500 has hit record highs and is up 16% this year, Bitcoin struggles to regain footing. Historically, Bitcoin’s first three annual losses were linked to market-shaking events:
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2014 – The Mt. Gox hack exposed weaknesses in crypto infrastructure, sending Bitcoin down 58%.
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2018 – A crash following the initial coin offering (ICO) bubble wiped out 74% of Bitcoin’s value, its largest annual drop to date.
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2022 – The collapse of major firms like FTX and a regulatory crackdown under President Biden triggered a major market meltdown.
Until October, Bitcoin seemed unstoppable. Supportive policies, ETFs attracting billions, and Trump’s endorsement all boosted confidence. But underlying issues, especially excessive leverage, made the market fragile. On October 10, US$19 billion in leveraged bets were liquidated, triggering a sharp correction. Large Bitcoin holders, or “whales,” began selling, maintaining downward pressure even after most leveraged positions were cleared.
Market activity has since slowed: turnover dropped significantly in November, investors withdrew over US$5.2 billion from US-listed spot Bitcoin ETFs, and market depth fell about 30% from the year’s high, according to Kaiko.
“Old whales selling really dampened momentum,” Kala said. “The industry got everything it asked for on the regulatory front — even ETFs with staking — but the price failed to follow.”
Bitcoin now faces a cautious market, with investors hesitant to re-enter while it searches for stability and direction.
News source by: Bloomberg
