Bitcoin falls below the $70,000 mark! Bitcoin drops to its lowest level since Trump's election victory, and the market is mired in a "crisis of confidence"!

Bitcoin briefly fell below the key psychological level of $70,000 on Thursday, marking the first time in 15 months that the cryptocurrency has touched this level. A global selloff in risk assets has pushed the world's largest cryptocurrency into a new downward channel.

Shiliang Tang, managing partner at Monarq Asset Management, said, the market is currently experiencing a “crisis of confidence.” Considering the current government has promised to strengthen US leadership in the digital asset sector, $70,000 is seen as an important psychological threshold. Therefore, some market observers believe that as $70,000 is breached, it may trigger a larger-scale selloff in the short term.

In Thursday's pre-market trading, Bitcoin fell to a low of $69,821. Since hitting its peak last October, Bitcoin has dropped more than 44% and is now hovering near its lowest level since Trump won the November 2024 election. At the same time, the total market capitalization has evaporated by $1.7 trillion since last October’s peak, with more than $460 billion lost just in the past week.

According to Coinglass data, in the past 24 hours, long positions in various tokens have been liquidated to the tune of $722 million. Wenny Cai, SynFutures COO, pointed out that the massive scale of liquidation shows market sentiment has shifted to risk aversion, and price movement is currently driven more by balance sheet mechanics than any narrative logic.

Bitcoin’s role as a safe haven asset under market stress is facing increasing challenges. So far this year, the token has dropped nearly 20%, while the global stock market only began synchronized selling on Wednesday. The Nasdaq 100 index dropped more than 2%, and Asian and European stock markets continued their decline on Thursday.

Major psychological threshold breached—Is Bitcoin entering a "downward spiral"?

The $70,000 level holds key political and psychological significance. This was Bitcoin’s trading price prior to the US election, marking the starting point of the crypto rally triggered by Trump’s election victory. According to a previous WallstreetCN article, Citi analysts note that crypto advocates are passionate donors in the US election, the current administration has promised to strengthen US leadership in digital assets, and a strategic Bitcoin reserve has been established.

According to CoinMetrics data, Bitcoin briefly fell to $69,821 around 6:27 a.m. ET on Thursday before rebounding above $70,000. Some market observers believe that a dip below $70,000 could trigger a larger wave of selling.

Andrew Tu, head of business development at crypto market maker Efficient Frontier, said market sentiment in crypto is now “extremely fearful.” “If Bitcoin can’t hold $72,000, it’s very likely to drop to $68,000, or even revert to the lows after the first rebound in early 2024.”

FG Nexus CEO Maja Vujinovic told CNBC: “The straight-line bull market many expected hasn’t really materialized. Bitcoin is no longer traded on hype—the story has lost some of its narrative, and now it’s purely a trade based on liquidity and capital flows.”

Institutional funds continue to flow out, hawkish signals from Walsh intensify selling pressure

Unlike the stock market, Bitcoin and other cryptocurrencies have been falling for months. US-listed Bitcoin ETFs have seen ongoing fluctuations in capital flows, indicating a sharp reversal in institutional demand.

According to Bloomberg data: after net inflows of about $562 million on Monday, more than $800 million flowed out of those ETFs over the following two trading days. A CryptoQuant report Wednesday indicated that US ETFs that bought 46,000 Bitcoins this time last year have switched to being net sellers by 2026.

So far this week, the liquidation scale for crypto longs and shorts has exceeded $2 billion. Analyst Wenny Cai said: “This doesn’t mean the end of institutional participation, but it does mark the end of complacency.”

Additionally, Trump’s January 29 nomination of Walsh as next Fed chairman triggered a 5.5% single-day drop in Bitcoin, and on January 31 Bitcoin posted its biggest single-day decline since January 2018—7.1%. Walsh is known for supporting higher real interest rates and shrinking the Fed’s balance sheet.

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