Bitcoin experienced a sharp rise following Donald Trump’s return to the White House, only to collapse just as rapidly over the past few months. Why has the cryptocurrency market entered a phase of severe turbulence, and do investors have any reason to expect a renewed upswing?
What happened?
At the close of the February 5 trading session, bitcoin recorded its steepest daily drop in more than three years. Its price fell by 14.02%, slipping below the $64,000 mark, according to data from the Binance platform. During the night of February 6, the sell-off continued: the cryptocurrency’s price moved closer to $60,000, representing a decline of more than 18% compared with the previous day’s peak. Ethereum showed a similar pattern.
Overall, during the past 24 hours, nearly all cryptocurrencies among the top 100 by market capitalization lost up to 25% of their value.
The market remains highly volatile. As recently as autumn 2025, bitcoin was still extending a multi-year rally, initially triggered by the launch in the United States of exchange-traded funds (ETFs) dedicated to cryptocurrency investments, and later reinforced by Donald Trump’s victory in the presidential election. During the campaign, the Republican candidate promised the crypto sector greater deregulation and increased government interest in the industry.
However, less than six months after reaching an all-time high, above $125,000, bitcoin has fallen back to its October 2024 levels. At the same time, shares of major crypto-related companies are declining, while roughly $2 billion has been withdrawn from ETFs within a single month.
What is behind the crash?
As is often the case with sharp price movements, the decline is the result of a combination of factors.
First, global financial markets are going through a period of heightened instability. Since the beginning of 2026, the Trump administration has taken a series of steps that have increased geopolitical risks: attempts to expand U.S. influence over Venezuelan oil production, abrupt statements directed at the European Union amid disputes over Greenland, and serious consideration of new strikes against Iran. Such signals traditionally prompt investors to scale back exposure to risk assets.
Second, White House personnel decisions have added further pressure on markets. The nomination of Kevin Warsh as chair of the U.S. Federal Reserve altered investor expectations. Known for his hawkish stance on inflation and monetary policy, Warsh has reduced expectations of a weakening dollar. This shift weighed on alternative assets, both traditional safe havens and speculative instruments, including cryptocurrencies.
Third, negative momentum was amplified by sell-offs in technology stocks. These are linked to a new wave of concerns about a potential bubble in the artificial intelligence sector, putting pressure on equity indices and reinforcing the broader flight to safety.
Finally, a technical factor played a key role. Massive liquidations of leveraged positions sharply accelerated the decline. Within a single day, cryptocurrency platforms forcibly closed positions held by around 560,000 traders, totaling $2.6 billion. More than $2.2 billion of this amount involved long positions, bets on rising prices. This dynamic intensified the snowball effect and fueled panic selling.
What comes next: continued decline or a new growth cycle?
For assets with a strong speculative component, long-term forecasts remain highly uncertain. Nevertheless, market expectations provide some insight into possible scenarios.
As noted by the Financial Times, the number of bets on bitcoin falling to $60,000 by the end of the year has surged in recent weeks on the professional betting platform Kalshi. Participants now estimate the probability of such a scenario at more than 85%.
Bloomberg also reports a shift in sentiment in the options market. Investors are increasingly purchasing protection against a decline around the $70,000 level. Medium-term contracts, including those expiring in the summer, reflect significantly more bearish expectations than at the start of the year.
At the same time, some analysts believe that the main wave of selling may be nearing its end. In their view, such sharp movements have often, in the past, represented entry points for investors with a long-term horizon.
For now, however, the market remains cautious. The euphoria sparked by Donald Trump’s return to the White House has given way to a reassessment of risks. Cryptocurrencies are responding more clearly to geopolitics, Federal Reserve decisions, and equity market dynamics, making them less autonomous and more vulnerable to external shocks.
