Bitcoin Suffers Sharp Decline in 2026, Losing Over 20% of Its Value
The cryptocurrency market is facing significant turbulence as Bitcoin, the world's largest digital asset, has experienced a dramatic downturn since the beginning of 2026. The digital currency has tumbled more than 20% this year, with its value sliding to approximately $67,000. This marks a steep decline from its record peak of over $124,000 in October, meaning Bitcoin has now surrendered almost half of its value in just a few months. Notably, the current price is lower than it was at the start of President Donald Trump's second term, highlighting the severity of the correction.
Volatile Trading and Broader Market Losses
Bitcoin's recent trading session has been highly volatile, with prices swinging between gains and losses. After touching a low of $60,008.52, it recovered slightly to trade 1.64% higher at $64,153.24. However, this minor rebound does little to offset the broader market devastation. According to Reuters, the global cryptocurrency market has lost a staggering $2 trillion in value since peaking at $4.379 trillion in early October. In the last month alone, $800 billion has been wiped out, indicating accelerating sell-off pressure.
Other major cryptocurrencies have also been hit hard. Ether has declined nearly 38% so far this year, while Bitcoin itself is down 28% over the same period. This widespread decline has fueled concerns about stress across the entire digital asset sector, particularly for companies with significant crypto holdings.
Publicly Listed Firms Grapple with Intensifying Challenges
As Bitcoin slid, shares of companies holding bitcoin and other digital assets came under heavy pressure. Publicly listed firms that piled into crypto last year, encouraged by US President Donald Trump's supportive stance, are now grappling with intensifying market challenges. The decline coincides with uncertainty over Federal Reserve rate cuts and concerns over AI company valuations, which are weighing on risk assets and pushing Bitcoin to its lowest level since November 2024.
MicroStrategy's Strategy unit has been particularly affected. Its shares have tumbled from $457 in July to $111.27 on Thursday, marking their lowest level since August 2024. The stock was last down more than 11%. In December, Strategy cut its 2025 earnings forecast, citing weak Bitcoin performance, and announced plans to create a reserve to support dividend payments. The company now expects full-year earnings between a $6.3 billion profit and a $5.5 billion loss, a sharp downgrade from its earlier forecast of $24 billion.
Other notable Bitcoin buyers have also been hit. UK-based Smarter Web Company fell nearly 18%, Nakamoto Inc lost almost 9%, and Japan's Metaplanet dropped over 7%.
Bitcoin Erases Gains Since Trump's Election
Bitcoin has now erased all gains made since Donald Trump's election, when he pledged to overhaul policies toward digital assets. The cryptocurrency last traded at $67,651. Recent selling accelerated after Trump nominated Kevin Warsh as the next Federal Reserve chair. Analysts cited by Reuters say that Warsh's appointment could lead to a smaller Fed balance sheet, which is viewed as negative for speculative assets like crypto.
"As Bitcoin continues its slide below the psychological barrier of $70,000, it's clear the crypto market is now in full capitulation mode," said Nic Puckrin, investment analyst and co-founder of Coin Bureau. "If previous cycles are anything to go by, this is no longer a short-term correction, but rather a transition... and these typically take months, not weeks."
Broader Digital Asset Holdings Also Impacted
Companies holding other tokens have been affected as well. Alt5 Sigma, which stocks the Trump family's WLFI token, fell 8.4%. SharpLink Gaming, holding ether, dropped 8%, while Forward Industries, which holds solana, fell nearly 6%. Bitcoin fell to a low of $63,295.74 on Thursday, its weakest since October 2024, before rebounding slightly to $63,525. This marked its largest one-day drop since November 2022. Approximately $1 billion in Bitcoin positions were liquidated over 24 hours, according to CoinGlass data.
Federal Reserve Concerns and Investor Outflows
Trump's Fed pick, Kevin Warsh, has added to market fears. Analysts say investors worry that a smaller balance sheet will remove liquidity support for speculative assets. "The market fears a hawk with him," Manuel Villegas Franceschi from Julius Baer told Reuters. "A smaller balance sheet is not going to provide any tailwinds for crypto."
Deutsche Bank analysts highlighted massive outflows from institutional ETFs as a key driver of the decline. US spot Bitcoin ETFs saw over $3 billion withdrawn in January, following $2 billion and $7 billion outflows in December and November, respectively. "This steady selling in our view signals that traditional investors are losing interest, and overall pessimism about crypto is growing," they said.
Tech Sector Weakness Compounds Crypto Pressures
The slide in cryptocurrencies has been compounded by a broader downturn in tech stocks, particularly software companies linked to AI. Bitcoin and other tokens have historically tracked risk appetite in technology markets, and the current weakness has intensified losses. "Concerns are being raised around the crypto miners and whether we could be looking at forced liquidations if prices continue to fall, which could lead to a vicious cycle," said Jefferies strategist Mohit Kumar, as cited by Reuters. The analyst further added that crypto "should never be more than a very small portion of a portfolio, but its heavy retail ownership adds to overall market risk."
Bitcoin, often pitched as "digital gold" due to its returns mirroring gold with no dividends or profits, is now facing a critical test as investor sentiment sours. With the market in turmoil, the path forward remains uncertain, hinging on Federal Reserve policies, regulatory developments, and broader economic conditions.
