This year's 30% gains have been "completely erased"; Bitcoin has fallen into a bear market.

As enthusiasm for the US government’s pro-crypto stance wanes and market risk aversion intensifies, Bitcoin is facing a severe test, and the bear market in the entire cryptocurrency sector appears to be deepening.

As the largest cryptocurrency by market capitalization, Bitcoin’s price fell below $93,714 on Sunday, completely erasing all of this year’s gains. This price level is now lower than its closing price at the end of 2024, meaning the annual gain of over 30% earlier this year has been “wiped out.”

This plunge occurred barely a month after the asset set a historic high. On October 6th, Bitcoin’s price soared to a record $126,251, but four days later, following unexpected remarks from US President Trump regarding tariffs that triggered global market turbulence, Bitcoin began its downward trend.

A reduction in institutional participation is one of the main driving forces behind this round of decline. According to Bloomberg data, so far this year, Bitcoin exchange-traded funds (ETFs) have attracted over $25 billion in inflows, pushing their total assets under management to about $169 billion. These steady flows of capital had helped reshape Bitcoin as a diversification tool in investment portfolios.

However, as major buyers—including ETF allocators and corporate treasury departments—quietly exit, the narrative of Bitcoin as a “hedge asset” is “becoming vulnerable again.” A typical example is Michael Saylor’s Strategy Inc., whose stock price is now close to the value of its Bitcoin holdings, indicating that investors are no longer willing to pay a premium for its highly leveraged Bitcoin strategy.

Macroeconomic Headwinds and Leverage Unwind

Changing macroeconomic conditions are another key factor. Matthew Hougan, Chief Investment Officer at Bitwise Asset Management, noted, “The overall market is in risk-off mode,” and “crypto is the canary in the coal mine, reacting first.”

The recent pullback in technology stocks has also caused a decline in overall market risk appetite. Jake Kennis, Senior Research Analyst at Nansen, said this selloff is “a confluence of long-term holders taking profit, institutional money flowing out, macro uncertainty, and leveraged long positions being liquidated.” He added that after a long consolidation period, the market has temporarily chosen a downward direction.

Altcoins Suffer Even Greater Losses

Widespread pessimism is intensifying the selloff. Matthew Hougan said, “Retail investor sentiment in crypto is quite negative,” and many are choosing to exit early to avoid experiencing another 50% steep drawdown. This pessimism is especially evident in the market for smaller, more volatile tokens (“altcoins”).

It is reported that the MarketVector index, which tracks assets ranked 51-100 among the top 100 digital assets, has dropped about 60% this year. Chris Newhouse, Research Director at decentralized finance-focused firm Ergonia, also observed that the market is generally “skeptical about deploying capital, with a lack of organic bullish catalysts.”

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