On October 6, bitcoin reached an all-time high.
Since then, things haven’t been going well, with the cryptocurrency dropping 17% in November alone, and starting December with a 7% drop, then a 7% gain.
What is happening on the blockchain?
Northeastern University cryptocurrency experts Ravi Sarathy and Alper Koparan said many macroeconomic factors — as well as the inherent volatility of Bitcoin and other cryptocurrencies — contribute to recent large swings in valuations.
“I would say that, more than not, there is an over-enthusiasm for anything crypto-related,” said Sarathy, a professor of international business and strategy at Northeastern.
But experts also said that bitcoin and cryptocurrencies in general are likely here to stay.
“Cryptocurrency markets, I think those markets will be around forever, regardless of the price of bitcoin,” said Koparan, an assistant professor of finance. “It’s like a playground for individual investors. It’s something you can do on the Internet without any limitations or restrictions. This activity will continue.”
Bitcoin hit an all-time high of around $126,000 on October 6, after rising 33% in 2025. But the world’s largest cryptocurrency by market value has since fallen: down around 14% in late October, 17% in November and another 7% on December 1, although it erased that most recent loss the next day.
Both Sarathy and Koparan said that bitcoin – born out of the Great Recession of 2008-2009 as a decentralized, simple and fast peer-to-peer exchange network – is inherently volatile for several reasons.
First, its demand exceeds the total circulating supply and its production is limited to 21 million coins, which the cryptocurrency is quickly approaching.
Cryptocurrencies like bitcoin are also not tied to a country’s currency and are easily accessible to individual investors through blockchain – a digital ledger in which transactions are recorded.
Finally, cryptocurrencies have limited regulation. This can lead to frequent speculation – either buying bitcoin or a cryptocurrency and hoping to sell it for a quick profit or selling it short – or using bitcoin as leverage to purchase more financial products.
“That’s really where I think the really high volatility is coming from,” Sarathy said.
But individual investors aren’t the only ones in the game.
While President Joe Biden’s Securities and Exchange Commission seemed “somewhat skeptical” of cryptocurrencies and blockchain-based businesses, the second Trump administration marked a “pretty dramatic shift” toward such businesses, Sarathy said.
This has encouraged institutional and corporate investors to enter the crypto market, particularly bitcoin, by investing in crypto-related exchange-traded funds, or ETFs, Koparan said.
But recently, institutional investors have changed course, favoring safer assets such as gold and silver.
“Over the last couple of years, we have seen a significant influx of funds or institutional investors into ETFs,” Koparan said. “But the end of October and November were months with negative flows.”
Additionally, Koparan said global bond markets are in flux.
The Bank of Japan should raise interest rates, which have been around 0% for more than a decade, while the Federal Reserve should cut interest rates in the United States, Koparan said.
That raises concerns about a reversal in the flow of carry trades that have fueled growth in the United States and other popular markets, Koparan said.
In a carry trade, an investor borrows in the currency of a country with low interest rates (e.g., Japan) and uses it to invest in a currency with higher interest rates (e.g., the United States), then, when the investments mature, converts the net amount back to the original currency.
“It may be that some investors are reading this as a red flag,” Koparan said. “And what you would do in such a situation is just exit high-risk investments, and bitcoin is one of them.”
So, will the crypto market collapse as institutional investors flee bitcoin?
Not necessarily.
“In the history of Bitcoin, there are several periods that we can relate to today’s events,” Koparan said. “The only difference today is that this price movement, this price action, is mainly driven by institutional investors.”
The market has gone through downturns before, most notably during the FTX collapse in November 2022, Sarathy added.
But he noted that Bitcoin’s long-term trend needs to be taken into account.
In about 15 years, bitcoin went from zero to $120,000, and it is now down to around $91,000, Sarathy said. “But it’s still pretty incredible.”
