Bitcoin, the world’s largest cryptocurrency, sank to $63,000 on Thursday (February 5), its lowest since October 2024. What’s behind this fall? Is the crypto run finally over?
Bitcoin, the world’s most famous cryptocurrency, sank to $63,000 on Thursday, its lowest level in more than a year. This drop followed months of surging Bitcoin prices, which saw the cryptocurrency hit an all-time high of $122,200 last October.
Thursday’s drop in Bitcoin is the lowest it has gone in 16 months, despite US President Donald Trump’s personal and public support for cryptocurrency. When he retook office in January 2025, he signed an executive order aimed at making the country the “crypto capital of the planet”. In addition, he launched his own brand of cryptocurrency and even continued his involvement with World Liberty Financial, an investment vehicle for other
crypto assets, which is owned by the Trump family.
So, what’s going on?
How bad is Bitcoin’s fall?
Bitcoin saw its sharpest fall on Thursday (February 5), plunging below $64,000, a 12.6 per cent slide. This is the lowest the cryptocurrency has fallen since October 2024.
According to a Reuters report, Bitcoin has already fallen 17 per cent for the week, taking its losses to 28 per cent so far this year.
The fall marked Bitcoin’s lowest point since Donald Trump won the US presidential election, and spoke in support of cryptocurrencies. One year into his tenure, he has signed a law to support federal backing of crypto.
But why is Bitcoin’s value falling?
Experts say a number of factors caused Bitcoin’s value to fall so drastically.
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Fear of a hawkish Fed Reserve: Analysts with Deutsche Bank pointed to Trump’s nomination of
Kevin Warsh as the new chair of the Federal Reserve. Warsh could take a more hawkish approach, including shrinking the Fed’s balance sheet.Typically, cryptocurrencies have been regarded as beneficiaries of a large balance sheet. As Manuel Villegas Franceschi from the next generation research team told Reuters, “The market fears a hawk with him. A smaller balance sheet is not going to provide any tailwinds for crypto.”
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Heavy liquidation: One of the biggest reasons for Bitcoin’s value to drop was forced liquidation. CoinGlass data revealed that nearly $1 billion worth of bitcoin positions were liquidated.
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Links with tech sector: It has been seen that the price of Bitcoin has risen alongside technology stocks, especially during periods of strong interest in artificial intelligence.
However, this week, the introduction of
Anthropic’s new AI tool saw IT stocks falling drastically, taking Bitcoin along with it. -
Overall volatility in the market: The volatility in the
silver and gold markets has worsened sentiment, resulting in a slide for Bitcoin. Precious metals have become more volatile due to leveraged buying and speculative trades. As prices fall, investors are forced to reduce their risk across their portfolios, affecting cryptocurrencies. -
Weakness in crypto: Bitcoin prices falling are in line with the wider decline across the crypto market. CoinGecko data reveals that the total value of the global crypto market has fallen by around $2 trillion since reaching a peak of $4.379 trillion in early October. More than
$1 trillion of this value has been wiped out in the past month alone.Bitcoin isn’t alone in seeing a slide in value. Ether, the second-largest cryptocurrency in terms of market capitalisation, was down more than 13 per cent on Thursday. It has fallen 19 per cent this week, with losses of nearly 38 per cent so far this year.
A Bitcoin ATM at Northgate Mall in San Rafael, California. Bitcoin, the world’s largest cryptocurrency, fell drastically on Thursday, dropping to its lowest level in over a year. AFP
So, what comes next for Bitcoin?
As Bitcoin prices have fallen, many are wondering what to do with their crypto. Financial advisors say the decision depends on how Bitcoin fits into your broader financial plan and how much volatility you can realistically tolerate.
“Bitcoin’s recent volatility is a reminder that crypto is still a speculative asset, not a core building block of most portfolios,” Vered Frank, a certified financial planner and founder of StackWealth, told CNBC. “Big drops after periods of hype show why it’s risky to rely on Bitcoin as a standalone wealth-building strategy.”
Meanwhile, Deutsche Bank noted, “This steady selling in our view signals that traditional investors are losing interest, and overall pessimism about crypto is growing.” It further added that while it didn’t see Bitcoin going anywhere, it wouldn’t return to Trump-driven highs.
Bitcoin investors, however, can take solace in the fact that Thursday’s crash is not a new trend. The crypto has seen such a fall before and risen again.
With inputs from agencies
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