Bitcoin fell below $61,000 on Thursday, extending a brutal start to 2026 that has wiped nearly $410 billion from cryptocurrency markets and raised fresh questions about the asset class’s role as a safe haven during periods of economic stress.
The world’s largest cryptocurrency dropped to as low as $60,000, bringing its year-to-date losses to approximately 20 per cent. The broader crypto market capitalisation has declined from nearly $2.95 trillion at the start of the year to roughly $2.54 trillion, with sentiment indicators reaching their lowest levels since November 2025.
The Fear and Greed Index, a closely watched measure of crypto market sentiment, now sits at 11, signalling “extreme fear” among investors. Of the top 100 cryptocurrencies by market capitalisation, 92 posted declines on Thursday, underscoring the breadth of the sell-off.
“As Bitcoin continues its slide toward the psychological barrier of $70,000, it’s clear the crypto market is now in full capitulation mode,” said Nic Puckrin, investment analyst at Coin Bureau. “This represents a transition from distribution to reset that typically takes months, not weeks.”
Crypto Market and Institutions
The downturn has been particularly acute for institutional investors. US spot Bitcoin exchange-traded funds recorded outflows of $544.94 million on Wednesday alone, with BlackRock’s iShares Bitcoin Trust leading the exodus at $373.44 million. For the second consecutive week, institutional outflows have exceeded $1.7 billion, bringing year-to-date redemptions to roughly $1 billion, according to data from CoinShares.
Strategy, the software company formerly known as MicroStrategy that has become synonymous with corporate Bitcoin accumulation, has seen its shares tumble more than 5 per cent. The stock now trades nearly 80 per cent below its November 2024 all-time high, with the company’s average Bitcoin cost basis sitting around $76,000 per coin.
Technical analysts point to deteriorating chart patterns as evidence of deeper structural problems. Bitcoin broke below its 365-day moving average for the first time since March 2022 and has declined 23 per cent in the 83 days since that breakdown, according to CryptoQuant. The cryptocurrency has also underperformed traditional safe-haven assets significantly, falling nearly 40 per cent over the past year while gold futures have gained 61 per cent.
“This steady selling signals that traditional investors are losing interest, and overall pessimism about crypto is growing,” Marion Laboure, analyst at Deutsche Bank, wrote in a client note on Wednesday.
Bearish Reasons
The current sell-off challenges a core narrative that has driven institutional adoption in recent years: that Bitcoin represents “digital gold” and serves as a hedge against economic uncertainty. Instead, the cryptocurrency has exhibited high correlation with risk assets, declining sharply alongside equities during periods of market stress. This said, Bitcoin and other top cryptocurrencies will revert to exhibit positive price performance, fuelled by existing and future use cases.
Multiple factors have contributed to the bearish sentiment. Geopolitical tensions have intensified, with the Trump administration threatening military action against Iran and imposing new tariffs that have rattled global markets. Uncertainty surrounding monetary policy has also weighed on crypto prices, particularly following Kevin Warsh’s nomination to replace Jerome Powell as Federal Reserve chair.
The correlation between Bitcoin and broader cryptocurrency markets remains exceptionally high. Despite the proliferation of thousands of alternative tokens and growing institutional infrastructure, crypto markets in 2026 continue to move largely in tandem with Bitcoin, offering investors little diversification benefit. CoinDesk indices tracking various cryptocurrency segments show declines ranging from 15 per cent to 19 per cent year-to-date across different categories.
The regulatory environment has also contributed to uncertainty. While the Trump administration has signalled a more crypto-friendly stance than its predecessor, concrete policy developments have been limited. Meanwhile, ongoing legal battles and enforcement actions by financial regulators continue to create headwinds for the industry.
Trading volumes have surged during the decline, reaching approximately $216 billion on Thursday, suggesting genuine distribution rather than illiquid price action. This heavy volume on down days typically indicates broad-based selling pressure rather than technical or isolated events.
Retail vs Institutions
For retail investors who entered the market during Bitcoin’s rally to all-time highs above $115,000 in late 2024, the current environment represents a harsh reversal. Many of these investors are now sitting on substantial losses, with some facing difficult decisions about whether to realise those losses or wait for a potential recovery.
The crypto industry’s maturation over recent years, including the launch of spot Bitcoin ETFs and increased institutional participation, was meant to reduce volatility and create more stable price action. However, the current drawdown suggests these structural changes have not fundamentally altered Bitcoin’s risk profile.
We remain bullish on the forth coming reversal as crypto is no longer a matter of trial. Instead it is a widely used technology that supports millions of businesses and souls globally.
