Bitcoin dropped harder than anyone expected, and no one actually knows what set it off. It lost 16% in a week, crashing to $70,008, and at one point touched $60,000. That’s a massive fall from the all-time high of $126,273 it hit in October. Ether didn’t do much better. It fell 24% to $2,052, now 59% below its record. Friday gave both tokens a little bounce, but that didn’t save the week. This was one of the worst stretches for crypto in years. The most frustrating part is how clueless everyone is. Even the most recognizable names in the space, like Anthony Pompliano, Michael Novogratz, and Anthony Scaramucci, had no real answer. Pompliano said, “Bitcoin is crashing and investors are freaking out.” Novogratz simply said, “There was no smoking gun.” Scaramucci put it plainly: “If you ask five experts, you’ll get five explanations.” Traders turn to other markets as bitcoin loses spotlight Pompliano pointed to distractions, saying that traders are busy throwing cash into prediction markets, gold, silver, AI projects, and even meme stocks. He used to think bitcoin was where people came for upside. Now they’re all over the place. “It used to be that bitcoin was the consensus view where asymmetry existed,” he said. “Now you have AI, prediction markets… many other areas where people can go and they can speculate.” Another problem is Wall Street. Over the past year, banks have rolled out all kinds of ETFs and derivatives tied to crypto. These tools let people bet on the price of bitcoin without ever touching the real thing. And that has hurt bitcoin’s status as a rare asset. Its supply is still limited to 21 million coins, but the financial industry has made it easier to gamble on price without actually buying any. During Trump’s comeback to the White House, bitcoin soared like crazy. From Election Day to early October last year, it jumped around 80%. Cory Klippsten, the CEO of Swan Bitcoin, admitted, “I really didn’t think that we’d see a six at the beginning of the bitcoin price ever again.” But here we are. That confidence has vanished. Past crashes always had some event behind them. In 2018, it was the ICO bubble. In 2022, it was the $40 billion collapse of TerraUSD and Luna, which wiped out companies and led to the disaster at FTX. This time? Nothing specific. Interest rates, regulatory fight and Trump’s laws cloud the picture Trump picked Kevin Warsh as the next chair of the Federal Reserve. Some think Warsh might be spooking the crypto crowd. He’s seen as someone who leans toward a stronger U.S. dollar policy and isn’t afraid of higher interest rates. That’s bad news for riskier assets. And the WSJ Dollar Index did climb 0.4% this week. Higher rates and a stronger dollar usually mean less demand for bitcoin. But Warsh isn’t completely against bitcoin. He once called it a “policeman for policy.” He even said bitcoin’s price can tell governments when they’re screwing up or doing well. That complicates the theory. Then there’s the law. Trump passed the GENIUS Act last year, which helped legalize stablecoins tied to real-world currencies. The next step was the Clarity Act, a bill to give crypto companies clear rules. But it hit a wall. A fight broke out between big banks and crypto exchanges. Now the whole thing is stuck, and without it, traditional firms are staying away. That missing regulation could’ve been the fuel the market needed. Instead, it’s just another dead end. Investors lock in profits while others keep holding on Some people like Novogratz think it’s just profit-taking.No mystery. Bitcoin and ether had big gains since Trump won, and some investors decided it was time to cash out. They didn’t wait around. They dumped tokens and banked the money. There’s even a name for it. They call it crypto winter, and it happens when prices fall fast and confidence goes cold. But this time, there hasn’t been a major collapse or fraud. That’s different from past crashes. Jasper De Maere, from Wintermute, said, “The infrastructure is stronger, stablecoin adoption continues to grow, and institutional interest hasn’t evaporated, it’s just sidelined.” He said the interest “can return quickly.” Some of the biggest believers haven’t flinched. Michael Saylor, who leads Strategy, held a call with investors on Thursday. His firm took a $12 billion quarterly loss from the drop in bitcoin. But he wasn’t panicking. He told investors the plan is to stay patient. “Your time horizon needs to be, minimal, four years,” he said. Don’t just read crypto news. Understand it. Subscribe to our newsletter. It's free .
