Bitcoin fell below $87,000 today, its lowest level since mid-November, as investors pulled out of riskier assets.
The sell-off extended to other major cryptocurrencies, with Ethereum, XRP, and Solana also experiencing significant losses.
Market analysts cite Bitcoin’s close correlation with tech stocks as a key reason for the decline. Rebecca Patterson, a senior fellow at the Council on Foreign Relations and former chief investment strategist at Bridgewater Associates, noted that cryptocurrencies typically move in tandem with tech stocks.
“Cryptocurrencies are a form of fintech, so it’s not surprising that when big tech stocks fall, Bitcoin follows suit,” Patterson told Bloomberg in an interview. “If Nvidia disappoints in its upcoming earnings report, we could see Bitcoin fall even further.”
The decline comes despite former President Donald Trump’s strong support for the crypto industry, who positioned himself as a “crypto president” and whose administration is expected to adopt a more positive regulatory stance towards digital assets.
“Over the next six to twelve months, we will see greater regulatory clarity that could allow for greater integration between crypto assets and the traditional banking system,” Patterson said. “This will lead to broader adoption and potentially reduce volatility.”
Stablecoins, an important segment of the crypto ecosystem, have also attracted the attention of regulators. Patterson emphasized that stablecoins, especially those backed by US Treasuries like Tether, can play a role in shaping financial markets.
“Tether alone holds over $113 billion in Treasury securities, making it a key player in the demand for U.S. government debt,” he said.
Despite the potential for a more crypto-friendly regulatory environment, concerns about systemic risks remain. Patterson cited the recent $1.5 billion Bybit hack as an example of vulnerabilities in the industry.
“If such an event were to occur in the US, it could trigger a wider financial crisis outbreak,” he warned.
As Bitcoin continues its slide, investors are questioning how much further the cryptocurrency can fall. Some analysts suggest a deeper tech market sell-off, likely triggered by regulatory actions or disappointing earnings, could push Bitcoin even lower.
“If we see further weakness in tech stocks, particularly due to tariffs or geopolitical tensions, the sell-off could accelerate,” Patterson said. “Many investors in crypto also hold tech stocks and memecoin stocks, so losses on multiple fronts could lead to further liquidation.”
*This is not investment advice.
