Bitcoin extended its sharp decline on Thursday, edging dangerously close to the psychologically important $70,000 level as mounting fears over tighter US monetary policy and sustained institutional outflows weighed heavily on the cryptocurrency market.
The world’s largest digital asset fell more than 3 percent during Asian trading hours, sliding to around $70,050 — its lowest level since November 2024 — and capping a brutal week that has erased billions of dollars in market value.
The downturn has reignited concerns that the post-2024 crypto rebound is losing momentum amid shifting global financial conditions.
Ether, the second-largest cryptocurrency by market capitalisation, also came under pressure, dropping nearly 2 percent to just above $2,080.
Analysts warned that a decisive break below $2,000 would mark ether’s weakest performance since mid-2025 and could trigger further selling across the digital asset complex.
Bitcoin slumps with key $70,000 level in sight
The renewed weakness underscores how fragile sentiment has become in crypto markets. Bitcoin slumps with key $70,000 level in sight as traders respond to a combination of policy uncertainty, risk-off positioning, and waning institutional enthusiasm.
Bitcoin has now fallen more than 7 percent in the past week alone and is down nearly 20 percent year-to-date. Ether’s losses have been even steeper, with the token shedding close to 30 percent since the start of the year.
Market participants attribute the sell-off largely to expectations of a more hawkish Federal Reserve following US President Donald Trump’s nomination of Kevin Warsh as the next Fed chair.
Warsh is widely viewed as favouring tighter monetary conditions and a reduction in the central bank’s balance sheet — a stance that could drain liquidity from financial markets.
Fed outlook weighs on digital assets
Cryptocurrencies have historically benefited from abundant liquidity and low interest rates, thriving during periods when central banks expanded balance sheets and injected cash into the financial system. That backdrop appears to be shifting.
“A smaller balance sheet is not going to provide any tailwinds for crypto,” said Manuel Villegas Franceschi, an analyst at Julius Baer. “The market fears a hawk with him.”
Expectations that the Federal Reserve could accelerate balance-sheet reduction have boosted the US dollar and weighed on speculative assets, including equities, commodities, and digital currencies.
Higher interest rates and tighter financial conditions raise the opportunity cost of holding non-yielding assets such as bitcoin.
As a result, investors have increasingly rotated away from riskier corners of the market, opting instead for traditional safe havens like cash and government bonds.
Beyond monetary policy concerns, sustained outflows from institutional investment vehicles have compounded pressure on crypto prices.
Analysts at Deutsche Bank said the current downturn is being driven largely by massive withdrawals from institutional exchange-traded funds (ETFs) linked to bitcoin.
According to their estimates, US spot bitcoin ETFs recorded outflows exceeding $3 billion in January alone, following roughly $2 billion in December and a staggering $7 billion in November.
“This steady selling signals that traditional investors are losing interest, and overall pessimism about crypto is growing,” the bank said in a note to clients.
The outflows highlight a sharp reversal from the optimism that followed the approval of spot bitcoin ETFs, which initially attracted large inflows from pension funds, asset managers, and high-net-worth investors seeking regulated exposure to digital assets.
Lingering scars from last year’s crash
The current sell-off also reflects lingering caution following last October’s market crash, when bitcoin tumbled from record highs after excessive leverage was flushed out of the system.
That episode exposed structural vulnerabilities within the crypto ecosystem, including overreliance on borrowed funds and speculative trading strategies. Although prices partially recovered in subsequent months, investor confidence has remained fragile.
“Crypto markets have struggled to regain a sense of stability,” said a Singapore-based digital asset strategist. “Each macro shock — whether it’s Fed policy, ETF flows, or geopolitical risk — now has an outsized impact.”
As leverage has declined, trading volumes have thinned, making prices more susceptible to sharp swings when sentiment turns negative.
From a technical perspective, the $70,000 mark has emerged as a critical support level for bitcoin. A sustained break below that threshold could open the door to deeper losses, with some analysts pointing to the $65,000–$67,000 range as the next potential area of support.
Traders are also closely watching ether’s $2,000 level, which has historically served as both psychological and technical support. A decisive move below it could accelerate downside momentum across alternative cryptocurrencies.
Meanwhile, volatility indicators suggest markets remain vulnerable to abrupt price moves, particularly if institutional selling intensifies or macroeconomic data surprises to the upside.
The crypto slump comes amid a broader recalibration across global markets. Equities have been jittery, commodities have pulled back from recent highs, and investors are reassessing risk exposure as geopolitical tensions ease and central banks maintain a restrictive stance.
While easing global tensions have reduced safe-haven demand in some asset classes, cryptocurrencies have failed to benefit, underscoring their sensitivity to liquidity conditions rather than geopolitical risk alone.
Some market watchers argue that the current correction could eventually create long-term buying opportunities, particularly if inflation moderates and the Fed softens its stance later in the year. For now, however, caution dominates.
Looking forward, crypto markets are likely to remain volatile as investors await clearer signals from the Federal Reserve, further data on ETF flows, and guidance on regulatory developments in major economies.
Any indication that the Fed may slow balance-sheet reduction or pivot towards a more accommodative stance could stabilise prices.
Conversely, confirmation of aggressive tightening could push bitcoin decisively below $70,000, reinforcing bearish sentiment.
For now, the message from markets is clear: the era of easy liquidity that once fuelled explosive crypto rallies is fading, and digital assets must navigate a far more challenging financial landscape.
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