Bitcoin has now fallen -47% since its $125.3K high last Oct 6th to today’s $65.9K. We expect this to continue reflecting a combination of macro forces, deleveraging, and shifting risk-off sentiment creating a prolonged correction similar to 2022.
Key contributing factors include:- Deleveraging and Liquidations: High futures open interest led to cascading liquidations when prices dropped. Billions in long positions were wiped out in waves, This amplified downside moves far beyond what fundamentals alone would suggest, as forced selling created thin liquidity and negative momentum.- Geopolitical and Macro Risk-Off Sentiment: Tensions involving Iran drove oil prices higher, stoked inflation fears, and pushed investors toward safe havens like gold, which surged while BTC fell. This coincided with a stronger U.S. dollar, hawkish Federal Reserve signals and rising Treasury yields. Risk assets, including BTC and tech stocks suffered as capital rotated out to safer havens.- ETF Outflows and Institutional De-Risking: After fueling the 2025 rally, spot Bitcoin ETFs saw significant net outflows reflecting profit-taking, drawdown thresholds, and reduced risk appetite amid volatility. This contrasted with earlier inflows and institutional support.Once the Iran war ends, these dynamics could reverse, and Bitcoin could surge as speculators resume risk-on positions. That said, interest rates will likely fall with the war’s end, causing investors to chase tech stocks and other long duration assets with quantifiable intrinsic values. After the 2021-2023 Bitcoin drawdown of -75% from $66.1K in Nov 2021 to $15.6K in Nov 2022 following Russia’s invasion of Ukraine, it took Bitcoin two and a half years (until March 2024) to fully recover its losses. We could see something similar play out here if sentiment continues to deteriorate.
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