📉 Crypto continues to bleed. BTC had a grueling start to the year, plummeting to nearly USD 60k last Thursday — a USD 20k drop in a single day — and hitting its lowest levels since October 2025. Ethereum, the second-largest digital asset, also fell by nearly 28% since the start of the month, trading at USD 1.7k on Friday — its lowest since April 2025. The collapse in crypto market capitalization hit Michael J. Saylor’s Strategy hardest, reporting a net loss of some USD 12.4 bn in 4Q 2025.

While BTC managed a slight rebound to USD 70k, price volatility fell by more than 50% from its all-time high of USD 126k last October. The downturn served as a reminder for investors: crypto does not function well as a safe haven. Since October, digital currencies have shed some USD 2 tn in total market value — with USD 800 bn lost in the last month alone. This coincided with a broader sell-off in high-risk assets, particularly big tech stocks, amid concerns over inflated valuations.

So, what pushed crypto off the edge? Despite 17 years since its emergence, cryptocurrencies remain a high-risk investment, requiring a specific environment to thrive. However, current global geopolitical tensions and Trump’s policies — despite being unprecedentedly pro-crypto — remain unpredictable, driving investors toward true safe havens such as gold and other precious metals.

Furthermore, pressure on the perpetual futures market since the October decline forced a massive liquidation of long positions. This persisted as over USD 3 bn in bullish BTC wagers were liquidated last Friday alone, according to CoinGlass data cited by Bloomberg.

Because liquidity is essential for market stability, even modest outflows can trigger price spikes and further liquidations in low-liquidity environments. Some may see this as a correction following the late 2025 rally, when BTC passed the USD 90k mark, however, it also reflects market fragility and heightened sensitivity to global monetary policy, especially after Trump nominated Kevin Warsh to head the Fed — a man known for his strict stance on monetary policy.

Looking ahead: Cryptocurrencies remain a modest hedging tool compared with stocks and precious metals, especially given China’s recent restrictive policies banning the offshore issuance of digital currencies or those linked to the CNY without a license. While long-term forecasts suggest market fundamentals will eventually stabilize, the current downward trend may persist in the near term. That said, some analysts remain more optimistic than others; JP Morgan’s Managing Director Nikolaos Panigirtzoglou argues that, as a long-term safe haven, BTC might eventually prove more attractive than gold.

Amid this uncertainty, investors are closely watching upcoming US monetary policy developments, as well as inflation and unemployment data due to be released this Wednesday and Friday. These indicators will provide the market with the signals needed to either spark a recovery or trigger further sell-offs.

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