Chart of the day: BITCOIN 40% below recent peak 🚨 Eroding fundamentals risk selling spiral 📉

Bitcoin is deepening its losses amid an unprecedented crypto sell-off, sliding below the critical $70,000 threshold at a pivotal moment (currently down ~2.4% to $70,800). This sharp plunge is fueled by several factors, including the exhaustion of the "AI Trade," a "hawkish" pivot signaled by Kevin Warsh’s nomination as Fed Chair and the collapse of the "institutional safety net" amid accelerating ETF outflows.

BITCOIN is in a strong downward phase, losing approximately 42% since its October peak. The price has broken through key support levels and is currently trading around $71,150, oscillating near the psychological barrier of $70,000. The MACD shows a strong bearish trend, with the histogram deep below the zero line. A sustained move below $70,000 could open the way to test the $68,000 level (yellow zone) or even long-term support at $54,000. Source: xStation5

The End of the "AI Trade" Damps Risk Appetite

Crypto is primarily weighed down by a global decline in risk appetite triggered by a sharp correction in tech stocks. Concerns over Microsoft’s CAPEX, disappointing AMD forecasts, and a $285 billion wipeout in Wall Street capitalization following Anthropic's debut of the Claude AI language model serve as catalysts for the crisis in the years-long AI trade. Investors have clearly grown weary of the "buy everything" trend and have shifted toward rotating capital into more certain winners of the AI race. The resulting panic over current valuations has effectively deepened the crypto declines that Bitcoin has recorded since October 2025.

Source: Bloomberg Finance LP

Warsh’s Nomination Signals Discipline

Alongside general sentiment, a primary fundamental driver of the bearish trend is the nomination of Kevin Warsh as the new Federal Reserve Chair. While Warsh has expressed pro-crypto views, acknowledging Bitcoin's place in many portfolios, the market has focused on his overall stance on "monetary discipline" and his criticism of the Fed's large balance sheet. With liquidity continuing to drop and real rates rising (as Warsh is perceived as "hawkish"), Bitcoin may become increasingly less attractive relative to the US dollar or Treasuries. On the other hand, it is worth noting Warsh's significant narrative shift regarding rates, specifically comments that falling inflation could occur in a low-rate environment if accompanied by appropriate productivity growth.

The Fed consistently reduced its balance sheet (total assets held) between 2023 and 2025, ending Quantitative Tightening (QT) at the end of last year. However, Kevin Warsh may lobby for further balance sheet reductions, potentially restricting liquidity. Source: Fed St. Louis

Institutional Foundations are Melting

U.S. Treasury Secretary Scott Bessent stated that the federal government lacks the authority to buy or bail out cryptocurrencies, signaling no systemic "safety net" for digital assets. His remarks cooled expectations for policy support, reinforced regulatory boundaries, and heightened the risk perception of cryptocurrencies. Investors have thus been forced to reassess the place of tokens in the financial system and ground their expectations regarding Bitcoin's potential institutionalization.

Furthermore, the "ETF bull run" trend is fading, with Bitcoin investment funds recording only outflows for some time. A key issue is the average price at which funds acquired the cryptocurrency, which in many cases is above the current valuation. This creates a genuine risk of forced liquidations, as risk managers, obligated to report using the mark-to-market method, may order sales to cut losses. Such a mechanism would fuel a self-fulfilling downward spiral, shattering the prevailing faith in Bitcoin as a stable foundation for corporate treasuries.

Source: XTB Research