(Bloomberg)– It took just over a month for cryptocurrencies to erase almost all of this year’s market value gains.
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At its Oct. 6 peak, the total market value of all cryptocurrencies hit a record of nearly $4.4 trillion, but a 20% decline since then leaves the asset class up a modest 2.5% for the year, according to CoinGecko data. The downturn that began with the sudden liquidation of about $19 billion in leveraged positions just days after the all-time high has shaken confidence, and traders show few signs of betting on a rebound.
The performance is a shock few could have predicted in a year defined by closer adoption of digital assets by regulators, global banks and institutional investors.
President Donald Trump’s efforts to cement the United States as the global crypto epicenter have sparked a flurry of activity and sent Bitcoin soaring as much as 35%. In a sign of how quickly sentiment has reversed, the market value of digital assets is now lower than it was when Trump took office.
Bitcoin has fallen 9% so far this week, putting it on track for its worst weekly performance since March. In doing so, it fell below its 200-day moving average, a closely watched support level that has held since the 2022 bear market. Bitcoin was trading just below $100,000 as of 12:30 p.m. Friday in London.
Although the recent sell-off was widespread, the biggest losses were concentrated in altcoins – smaller, more volatile tokens – which have significantly underperformed this year.
“With the exception of Bitcoin and Ether, cryptocurrencies have been trading largely down for months,” said Augustine Fan, partner at SignalPlus. “There has been little new money flowing into alt tokens or DeFi projects.”
With few short-term catalysts and lingering concerns about safety and regulation, participation from the general public will likely remain low, Fan added.
Jeff Mei, chief operating officer of crypto exchange BTSE, said the latest decline in digital assets was partly due to “concerns about severe overvaluation of AI stocks.” He warned that “if we see a sell-off in AI and technology stocks, it is very likely that Bitcoin could fall below the $100,000 mark and altcoins could fall even further.”
Despite the gloom, some signs of stabilization are appearing. After six straight days of net outflows, U.S. Bitcoin and Ether spot ETFs saw inflows of $253 million on Thursday.
