Crypto’s downturn is in part spurred by recent macroeconomic factors. One analyst attributes it to soft earnings reports in the tech sector, gold and silver declining, and the nomination of Kevin Warsh as Federal Reserve chair.
“Bitcoin’s breakdown stems from a confluence of three factors that took markets days to digest: disappointing Magnificent Seven earnings that cracked the AI narrative, a violent precious metals unwind, and uncertainty around Kevin Warsh’s Fed chair nomination,” said Jasper de Maere, a desk strategist at Wintermute.
As investors steer clear of the dollar, precious metals have also seen volatile price swings. Gold and silver reached record highs last week, only to fall by 11% and 32%, respectively.
The crypto world is no stranger to down cycles. The last significant crypto winter took place in 2022 and 2023, when Terraform Labs and FTX collapsed under the watch of disgraced crypto figures Do Kwon and Sam Bankman-Fried. There is no major scandal that sparked the decline this time around. Instead, investors are shying away from risky assets during uncertain times.
“Crypto’s been in a bear market longer than most appreciate, but this is organic deleveraging rather than structural crisis,” de Maere added.
