โถ Coinbase Website: Coinbase.com
โถ CEX Website: cex.io
Bitcoin’s dramatic selloff continues as the world’s biggest cryptocurrency wipes out all gains it has made since President Donald Trump’s re-election. Nobel laureate Paul Krugman, a City University of New York professor and Substack author, joins Bloomberg Businessweek Daily to discuss. Krugman’s most recent Substack post argues that Bitcoin and crypto could currently be seeing a legitimate “winter” due to political factors and asset hoarding. He also argues that if there’s going to be a Bitcoin collapse, it should happen now before it becomes too big and interconnected with other asset classes. Krugman speaks with Carol Massar and Tim Stenovec. Bitcoinย tumbled below $61,000, as the unwinding of leveraged bets and broader market turbulence deepened a selloff that has wiped out all of the gains since Presidentย Donald Trumpโs election set off a speculative rush into cryptocurrencies.ย
The token sank as much as 4.8% to $60,033 in early Asia trade Friday, extending a sharp selloff to plunge to its lowest since October 2024. The rout has erased half of Bitcoinโs value since it reached a record four months ago and has spread toย other tokens, related ETFs and companies likeย Strategy Inc.ย that hold vast sums of coins. The downturn has marked an abrupt retreat from Bitcoinโs meteoric rise through much of last year, when the return of the crypto-friendly Republican to the White House sent investors piling into such tokens and the Wall Street vehicles that have sprouted up around them. The market started cracking this month as rising geopolitical tensions sent tremors across global financial markets and curbed risk taking. That sparked Bitcoinโs precipitous decline from mid-January and set off a self-reinforcing cycle of selling as funds liquidated assets to meet redemptions and unwind leveraged bets.
โThe fear and uncertainty across the market is evident,โ said Chris Newhouse, head of business development at Ergonia. โWithout conviction-based buyers willing to lean into the selling, each wave of ETF redemptions and liquidation cascades.โ He said thatโs โamplifying the magnitude of each leg lower and reinforcing the defensive positioning thatโs keeping organic demand on the sidelines.โ The slide has echoes of the one in 2022, when prices retreated sharply from the surge seen during the easy-money era of the pandemic as theย Federal Reserveย tightened monetary policy. It has already taken a toll on intermediaries like the exchangesย Coinbase Global Inc., whose shares have tumbled more than 30% this year, andย Gemini Space Station Inc., whichย saidย it plans to cut up to 25% of its workforce and wind down operations in the UK, European Union and Australia.
This time, Bitcoin and other cryptocurrencies are also seeing competition from other forms of speculation, like legalized sports gambling and prediction-market wagering on everything from politics to entertainment. At the same time, retail flow continues to chase zero-day options in equities and higher-yield crypto plays across decentralized exchanges.
The latest drop comes as digital assets face continued doubts about their real-world use, as well. Once touted as an inflation hedge or a rival to gold or the US dollar as a stable store of value, Bitcoin has continued to trade more like a high-risk asset and has failed to serve as a haven during times of financial market stress. In fact, its growing presence in institutional portfolios has at times made it more vulnerable to broad de-risking, particularly during bouts of volatility in tech equities and precious metals, like what has been seen in recent weeks.
โMomentum has taken over right now and crypto bear markets tend to end more in apathy than despair,โย Ryan Rasmussen, director and head of research at Bitwise Asset Management.ย
โWe are currently in the despair phase of the drawdown,โ he said. โThat momentum has taken over.โ
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โถ Coinbase Website: Coinbase.com
โถ CEX Website: cex.io
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