The cryptocurrency market faced a severe downturn on Monday, mirroring a broader sell-off in technology stocks. Bitcoin, the flagship digital currency, led the decline, extending losses that have now erased a significant portion of its recent gains.
Major Crypto Assets and Stocks Take a Hit
Bitcoin slid 6.5% during the session, after an earlier drop of nearly 12%. It settled just above the $85,000 mark. This decline marks a steep fall of approximately 33% from its all-time high of $126,210.50 recorded on October 6, as per data from Coinbase. The slump was not confined to the currency itself.
Publicly traded companies tied to the crypto ecosystem were hammered. Coinbase Global fell 5.4%, while the popular trading app Robinhood Markets lost 4.4%. Bitcoin mining firm Riot Platforms dropped 2.8%. Notably, Strategy, a major crypto treasury company, tumbled a sharp 10%. The firm, which holds a massive 649,870 bitcoin (worth about $55 billion as of Monday afternoon ET), exemplifies the scale of the market rout.
Trump-Linked Crypto Ventures and ETF Outflows Suffer
The sell-off also impacted ventures associated with former US President Donald Trump. American Bitcoin, where his sons Eric Trump and Donald Trump Jr. hold a stake, fell 8.1% and is down over 41% since September 30. Other tokens linked to Trump saw dramatic declines. The World Liberty Financial token ($WLFI) saw its market value drop to around $4.14 billion from above $6 billion in mid-September. A meme coin named for Trump, $TRUMP, traded at just $5.67, a fraction of its $45 price tag just before his January inauguration.
The popular investment route of spot bitcoin ETFs witnessed significant outflows. Data from Morningstar Direct reveals investors pulled a staggering $3.6 billion out of these funds in November, the largest monthly withdrawal since their launch in January 2024. In a telling shift, while Bitcoin futures fell nearly 24% in the past month, gold futures rose almost 7%, highlighting a flight to safety.
Analysts Point to Multiple Factors Behind the Crash
Financial analysts attribute the collapse to a confluence of factors. A broad risk-off sentiment has gripped global markets this fall, pushing investors toward traditional safe havens like bonds and gold. In a recent note, Deutsche Bank analysts pointed to institutional selling, profit-taking by long-term holders, and a more hawkish Federal Reserve as key drivers. The bank also noted that stalled crypto regulation in the US has added to market uncertainty.
"While volatility remains inherent, these conditions indicate Bitcoin’s portfolio integration is being tested, and raises questions of whether this is a temporary correction or a more prolonged adjustment," the Deutsche Bank analysts wrote. On the regulatory front, while a stablecoin bill was signed into law in July, a broader cryptocurrency market structure bill remains stalled in the Senate, a key concern for the industry that heavily backed Trump's election.
