Bitcoin's drop below the $72,000 mark has brought the issue of 'faith' in the crypto market to the forefront. Against the backdrop of a sharp decline in global risk appetite, investors are reassessing Bitcoin's role during market turbulence, questioning the safe-haven narrative of crypto assets.
According to Bloomberg, Bitcoin fell to $71,739 at the close of trading in New York on Wednesday, marking the first time it dropped below $72,000 in about 15 months. Compared to its peak last October, Bitcoin has retreated by over 42%, with a year-to-date decline of approximately 17%, reaching its lowest level since November 6, 2024.
This round of selling is no longer just a continuation of internal deleveraging in the crypto market but is driven by broader cross-asset pressures. Global markets experienced synchronized selling on Wednesday, with the Nasdaq 100 Index falling over 2%. Sectors more sensitive to interest rates, such as software and chips, were under pressure, and Bitcoin weakened accordingly.
On the sentiment front, a 'crisis of faith' is emerging. Shiliang Tang, Managing Partner at Monarq Asset Management, stated that the market is experiencing a 'crisis of faith.'
Andrew Tu, Head of Business Development at Efficient Frontier, added that crypto market sentiment is now in 'extreme fear.' If the $72,000 level is breached, Bitcoin could fall to $68,000 or even return to the low range seen before the initial rebound in early 2024.
According to Polymarket, there is an 83% probability that Bitcoin will fall to $65,000 this year, while the probability of dropping below $55,000 has climbed to about 59%.
According to Bloomberg, the selling pressure on Bitcoin on Wednesday was related to broader cross-asset tensions rather than being solely driven by internal crypto asset liquidations. This sends a clear message to investors: during synchronized selling phases, Bitcoin has not demonstrated resilience independent of risk assets but instead behaves more like a high-volatility, long-tail risk asset.
The Nasdaq 100 Index fell over 2% on the same day, with losses spreading to sectors such as software and chips. Bitcoin's breach of a key psychological level during the same trading session reinforced its perception as moving in tandem with risk appetite.
Price declines are quickly transmitting through market capitalization contraction. According to CoinGecko data, the total market capitalization of crypto assets has shrunk by approximately $1.7 trillion since the peak last October. In the past week alone, the crypto market lost over $460 billion in value.
As the largest cryptocurrency, the extent and speed of Bitcoin's decline have an 'anchoring effect' on market sentiment. When Bitcoin's year-to-date losses widen to around 17%, risk control, margin management, and fund redemption pressures often rise simultaneously, exacerbating overall volatility.
Statements from market participants indicate that sentiment shifts are becoming a core variable. The 'crisis of faith' mentioned by Shiliang Tang points to investors' simultaneous wavering in both the long-term narrative of crypto assets and their short-term pricing mechanisms.
More critically, the driver of the decline has changed. According to Bloomberg, previous downturns were more driven by crypto-specific liquidations, whereas Wednesday's pressure stemmed from broader cross-market tensions.
This means that even if internal leverage unwinding in the crypto market concludes, Bitcoin may still lack catalysts for an independent rebound as long as external risk assets remain under pressure.
Several traders view the $72,000 level as a key short-term price point. Andrew Tu noted that if this level cannot be held, Bitcoin is 'very likely' to test $68,000 and could potentially return to the low range seen before the initial rebound in early 2024.
According to Polymarket, there is an 83% probability that Bitcoin will fall to $65,000 this year, while the probability of dropping below $55,000 has climbed to about 59%.
Fund flows are also sending mixed signals. According to data compiled by Bloomberg, U.S.-listed spot Bitcoin ETFs recorded approximately $562 million in net inflows on Monday but switched to $272 million in net outflows on Tuesday, indicating unstable incremental capital.
Amid the price decline and fluctuating fund flows, market skepticism about Bitcoin's role as a 'safe-haven asset during stress periods' is growing.
