Despite modest gains recorded on Friday, the world’s two largest cryptocurrencies are off to a historically bad start to the year. Bitcoin is down almost 24% since January 1 to around $67,000, and Ethereum is also down around 34% to around $2,000. These are the worst annual performances on record, according to FortuneIt is analysis of public data from CoinGecko, which dates back to mid-2013 for Bitcoin and mid-2014 for Ethereum.
Although cryptocurrency price movements have often followed the stock market as a whole, the two asset classes have diverged over the past couple of months. Since January, the stock market has been on the rise. The S&P 500 is up about 0.4% and the Dow is up 2.3%. And even metals, which saw a sharp fall almost three weeks ago, are also performing well. Gold rose about 17% to start the new year, and silver jumped about 14%.
The crypto market’s divergence from broader economic gains has led many to proclaim that the sector has entered a new crypto winter, even though Bitcoin had reached all-time highs just four months ago.
“We are certainly in a crypto winter,” said Danny Nelson, research analyst at crypto asset manager Bitwise. “You can tell by the way investors react to good news. (They don’t.)”
Slowdowns and losses
The year-to-date fall in Bitcoin and Ethereum prices follows what has since been dubbed a “flash crash” on October 10, where traders saw more than $19 billion in leverage evaporate after President Donald Trump issued a new round of tariff threats against China. The one-day implosion in crypto markets was the worst liquidation event ever tracked by crypto analytics firm CoinGlass.
Since then, the industry has been struggling. Bitcoin is down more than 46% since the beginning of October. Cryptocurrency exchanges like Coinbase and Gemini reported poor results for their fourth quarter. And some traders are deep in the red. BlockFills, a crypto lender and hedge fund, suspended client withdrawals earlier in February. The company is now looking for a buyer and is recording losses of more than $75 million, according to CoinDesk.
A BlockFills spokesperson declined to comment.
The months-long decline has confused many in crypto. Previous bear markets followed explicit collapses, like FTX’s plunge in November 2022. There hasn’t been an obvious catalyst for the recent downturn, especially as the crypto industry enjoys unprecedented acceptance among U.S. regulators and Wall Street takes a closer look at the asset class.
This gave some analysts hope. “The crypto reality is getting stronger and stronger,” said Nelson, a research analyst at Bitwise. “These changes will last well beyond the current recession. »
His comments echo those of Tom Lee, co-founder of analytics firm Fundstrat and famed Ethereum booster, who said in a recent interview: “We are really close to the end. »
