Bitcoin is deepening its losses amid an unprecedented crypto sell-off, sliding below the critical $70,000 threshold at a pivotal moment (currently down ~2.4% to $70,800). This sharp plunge is fueled by several factors, including the exhaustion of the “AI Trade,” a “hawkish” pivot signaled by Kevin Warsh’s nomination as Fed Chair and the collapse of the “institutional safety net” amid accelerating ETF outflows.
BITCOIN is in a strong downward phase, losing approximately 42% since its October peak. The price has broken through key support levels and is currently trading around $71,150, oscillating near the psychological barrier of $70,000. The MACD shows a strong bearish trend, with the histogram deep below the zero line. A sustained move below $70,000 could open the way to test the $68,000 level (yellow zone) or even long-term support at $54,000. Source: xStation5
The End of the “AI Trade” Damps Risk Appetite
Crypto is primarily weighed down by a global decline in risk appetite triggered by a sharp correction in tech stocks. Concerns over Microsoft’s CAPEX, disappointing AMD forecasts, and a $285 billion wipeout in Wall Street capitalization following Anthropic’s debut of the Claude AI language model serve as catalysts for the crisis in the years-long AI trade. Investors have clearly grown weary of the “buy everything” trend and have shifted toward rotating capital into more certain winners of the AI race. The resulting panic over current valuations has effectively deepened the crypto declines that Bitcoin has recorded since October 2025.
Source: Bloomberg Finance LP
Warsh’s Nomination Signals Discipline
Alongside general sentiment, a primary fundamental driver of the bearish trend is the nomination of Kevin Warsh as the new Federal Reserve Chair. While Warsh has expressed pro-crypto views, acknowledging Bitcoin’s place in many portfolios, the market has focused on his overall stance on “monetary discipline” and his criticism of the Fed’s large balance sheet. With liquidity continuing to drop and real rates rising (as Warsh is perceived as “hawkish”), Bitcoin may become increasingly less attractive relative to the US dollar or Treasuries. On the other hand, it is worth noting Warsh’s significant narrative shift regarding rates, specifically comments that falling inflation could occur in a low-rate environment if accompanied by appropriate productivity growth.
The Fed consistently reduced its balance sheet (total assets held) between 2023 and 2025, ending Quantitative Tightening (QT) at the end of last year. However, Kevin Warsh may lobby for further balance sheet reductions, potentially restricting liquidity. Source: Fed St. Louis
Institutional Foundations are Melting
U.S. Treasury Secretary Scott Bessent stated that the federal government lacks the authority to buy or bail out cryptocurrencies, signaling no systemic “safety net” for digital assets. His remarks cooled expectations for policy support, reinforced regulatory boundaries, and heightened the risk perception of cryptocurrencies. Investors have thus been forced to reassess the place of tokens in the financial system and ground their expectations regarding Bitcoin’s potential institutionalization.
Furthermore, the “ETF bull run” trend is fading, with Bitcoin investment funds recording only outflows for some time. A key issue is the average price at which funds acquired the cryptocurrency, which in many cases is above the current valuation. This creates a genuine risk of forced liquidations, as risk managers, obligated to report using the mark-to-market method, may order sales to cut losses. Such a mechanism would fuel a self-fulfilling downward spiral, shattering the prevailing faith in Bitcoin as a stable foundation for corporate treasuries.
Source: XTB Research
The material on this page does not constitute financial advice and does not take into account your level of understanding, investment objectives, financial situation or any other specific needs. All information provided, including opinions, market research, mathematical results and technical analyzes published on the Website or transmitted To you by other means, it is provided for information purposes only and should in no way be construed as an offer or solicitation for a transaction in any financial instrument, nor should the information provided be construed as advice of a legal or financial nature on which any investment decisions you make should be based exclusively To your level of understanding, investment objectives, financial situation, or other specific needs, any decision to act on the information published on the Website or sent to you by other means is entirely at your own risk if you In doubt or unsure about your understanding of a particular product, instrument, service or transaction, you should seek professional or legal advice before trading. Investing in CFDs carries a high level of risk, as they are leveraged products and have small movements Often the market can result in much larger movements in the value of your investment, and this can work against you or in your favor. Please ensure you fully understand the risks involved, taking into account investments objectives and level of experience, before trading and, if necessary, seek independent advice.
