Bitcoin continued its downward trend on Thursday, edging dangerously close to the psychologically important $70,000 level. The latest decline highlights growing unease across cryptocurrency markets as macroeconomic signals weigh heavily on investor sentiment.
During the Asian trading session, bitcoin fell more than 3 percent to around $70,052, marking its lowest level since November 2024. The move suggests that selling pressure remains strong, with little indication of an immediate rebound.
Ether, the second-largest cryptocurrency by market value, also traded lower. It slipped nearly 2 percent to approximately $2,086. A further decline below $2,000 would be notable, as it would represent the first time ether has breached that level since May of last year.
The recent sell-off in digital assets has been swift and sharp. Analysts attribute much of the weakness to expectations surrounding monetary policy in the United States, particularly following the nomination of Kevin Warsh as the next Chair of the Federal Reserve.
Market participants believe Warsh could take a more hawkish approach, including efforts to reduce the Federal Reserve’s balance sheet. Such a shift would likely drain liquidity from financial markets, which has historically been unfavorable for speculative assets like cryptocurrencies.
Bitcoin has already declined more than 7 percent over the past week. Year to date, losses have reached nearly 20 percent, reflecting a sustained downturn rather than a short-term correction. Ether has performed even worse, with losses approaching 30 percent so far this year.
Cryptocurrencies have often benefited from periods of ample liquidity, especially when central banks expand their balance sheets. Easy monetary conditions tend to encourage risk-taking, supporting assets such as bitcoin and other digital tokens.
According to analysts, the prospect of tighter financial conditions has unsettled investors. Concerns that reduced liquidity will remove a key pillar of support for crypto markets are now driving risk aversion.
The industry has also been grappling with lingering effects from a major downturn last October, when bitcoin fell sharply from record highs. That episode wiped out leveraged positions and dampened enthusiasm among both retail and institutional investors.
Recent data points to a notable withdrawal of institutional capital from the sector. Analysts at Deutsche Bank report that institutional exchange-traded funds linked to cryptocurrencies have experienced consistent outflows in recent months.
US spot bitcoin ETFs alone reportedly saw more than $3 billion in outflows in January, following significant withdrawals in December and November. This sustained selling suggests that traditional investors are scaling back exposure to digital assets.
As confidence weakens, overall sentiment toward cryptocurrencies remains fragile. Until clarity emerges on monetary policy and institutional flows stabilize, bitcoin and ether may continue to face downside risks in the near term.
