Bitcoin Crashes 44%–Trump Hopes Shattered!

Cryptocurrency coins on a trading screen background.

Bitcoin plunged 44% from its $125,000 peak, betraying promises of digital gold as institutions fled amid Fed hawkishness—what triggered this brutal reversal?

Story Snapshot

Bitcoin fell from $125,000 in October 2025 to below $70,000 by early 2026, erasing post-Trump election gains.
Institutional outflows from ETFs topped $12 billion since November 2025, unlike past retail-driven crashes.
Kevin Warsh’s Fed chair nomination sparked Bitcoin’s worst daily drop since 2018.
Stalled CLARITY Act and macro pressures like inflation and tariffs crushed crypto enthusiasm.
Fear and Greed Index hit 15, signaling extreme fear as adoption dropped from 17% to 12%.

Bitcoin’s Post-Peak Plunge Timeline

Bitcoin surged over 40% in late 2024 after Donald Trump’s election victory. His pledges to make America the crypto capital, including a strategic bitcoin reserve, fueled optimism. The cryptocurrency hit $125,000 in October 2025. Momentum reversed in November as regulatory progress halted. By late January 2026, Kevin Warsh’s nomination as Federal Reserve chair triggered the largest daily decline since 2018. Prices sank below $70,000 by early February, a 44% drop from peak.

Institutional Exodus Drives the Sell-Off

Institutional investors withdrew over $7 billion from spot Bitcoin ETFs in November 2025, $2 billion in December, and $3 billion in January 2026. Deutsche Bank analyst Marion Laboure pinpointed hawkish Fed signals, thinning liquidity, and stalled regulations as core drivers. Institutions reduced exposure, amplifying price falls through lower trading volumes. This shift marked a departure from retail panic in prior cycles, revealing Bitcoin’s vulnerability to big money outflows.

Macro Headwinds and Failed Safe-Haven Status

Labor market slowdown, inflation above 2%, and Trump’s tariff threats against Canada, South Korea, and European nations eroded risk appetite. Geopolitical tensions over Greenland, Venezuela, Ukraine, and Iran added pressure. Bitcoin decoupled from gold, which performed strongly, shattering its digital gold narrative. Bybit’s Han Tan declared crypto bears in control during this post-cycle digestion phase. Crypto market cap lost half a trillion dollars in a week.

Precious metals deleveraging spilled into Bitcoin, forcing sales. Capital.com’s Kyle Rodda highlighted built-up leverage amplifying the plunge. U.S. crypto adoption slipped to 12% from 17% in summer 2025. Bitcoin declined 19% in seven days, with a $4,752 one-day drop. Four straight monthly losses echoed pandemic-era pain.

Expert Views Align on Multi-Causal Decline

MIT’s Christian Catalini stated risk aversion from economic uncertainty hits Bitcoin hard. Morningstar’s Bryan Armour called it a snowball effect, with drops liquidating leveraged positions. Analysts agree on institutional flows, Fed policy, and regulation stalls, though some stress deleveraging. Trump administration’s pro-crypto talk clashed with Warsh’s hawkish stance, breeding uncertainty. Common sense dictates mixed signals undermine confidence, aligning with conservative values favoring stable policy.

Recovery Hinges on Regulation and Reset

Short-term, traditional assets lure retail investors, constraining rebound. Long-term, Digital Asset Market CLARITY Act passage tests sustainability. White House pushes lobbyists for February agreement. Without clarity, institutional trust lags amid AML, KYC, and energy concerns. Bitcoin underperforms equities, losing diversification appeal. Miners face profitability squeezes, industry volumes shrink. Broader reallocation to gold signals risk-off reality.