Bitcoin falls below US$70,000 as market faces a ‘crisis of faith’

[LONDON] Bitcoin slumped below US$70,000, a level last seen 15 months ago, as a broad risk-off sentiment engulfed global markets.

The largest cryptocurrency is extending a downward spiral that has seen it shed more than 44 per cent from its peak in October last year. Bitcoin tumbled as low as US$69,821 in early New York trading on Thursday (Feb 5), and is hovering around the lowest levels since Donald Trump’s election win in early November 2024.

“The market is currently navigating a ‘crisis of faith’,” said Tang Shiliang, managing partner of Monarq Asset Management.

While earlier legs of the decline were driven by crypto-specific liquidations, the recent pressure is tied to wider cross-asset stress. Some US$722 million of bullish positions across tokens have been liquidated in the past 24 hours, Coinglass data shows. 

“Liquidations have been heavy, sentiment has swung risk-off, and price action is now being driven more by balance-sheet mechanics than narrative flow,” said Wenny Cai, chief operating officer of trading platform SynFutures. “This doesn’t signal the end of institutional participation, but it does mark the end of complacency.” 

Markets entered a period of synchronised selling on Wednesday, with the Nasdaq 100 down more than 2 per cent and losses spreading across software, chipmakers and other rate-sensitive corners of the equity market. Stock declines continued on Thursday, with most benchmarks in Asia and Europe lower.

Unlike equity markets, however, Bitcoin and other tokens had already been sliding for months. 

“Crypto sentiment is currently in extreme fear as the market has been routed over the last week,” said Andrew Tu, head of business development at crypto market maker Efficient Frontier. “If US$72,000 doesn’t hold for Bitcoin, it’s highly likely we will visit US$68,000 and potentially even decline back down to the lows of 2024 after the initial rally.”

Flows to US-listed Bitcoin exchange-traded funds remain choppy. After seeing about US$562 million in net inflows on Monday, more than US$800 million flowed out of such ETFs over the next two sessions, data compiled by Bloomberg show. 

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Scepticism about Bitcoin’s role as a safe haven during market stress is growing. The token is now down almost 20 per cent this year, and the broader crypto market has lost over US$460 billion in value in the past week.

“At current levels, Bitcoin has returned to an area that was a strong resistance from March to October 2024,” Alex Kuptsikevich, chief market analyst at FxPro, said in a note on Thursday. “This explains the current interest of bargain hunters.” BLOOMBERG