‘It’s unclear what the future will look like,’ said David Miller, senior portfolio manager at Catalyst Funds.
Bitcoin investors have settled in for a new crypto winter.
With a president sympathetic to digital assets in the White House, the crypto sector assumed it was on the verge of a more prosperous period driven by a friendlier regulatory environment.
The first several months of 2025 were a boon for the industry as prices reached record levels.
Bitcoin topped $127,000 for the first time, while Ethereum eyed $5,000.
The rally among the major cryptocurrencies was the hallmark of a lift-all-boats effect, as millions of other digital assets also surged to levels never seen before.
As summer transitioned to fall, cold temperatures began to permeate through crypto markets.
The price of bitcoin, which accounts for almost 60 percent of the global market cap, cratered to as low as $60,000. It has since recovered—the top crypto asset is hovering around $70,000—but remains down 21 percent year-to-date.
Unsurprisingly, stocks closely tied to cryptocurrency have also been hammered.
Strategy, for example, provides investors with enormous exposure to the premier digital currency as it owns more than half a million bitcoin.
Shares have collapsed nearly 60 percent over the past 12 months, trading at around $140.
Coinbase Global, the largest U.S.-based cryptocurrency exchange, is also down more than 40 percent in the past year.
According to the CMC Crypto Fear and Greed Index, the market is firmly entrenched in “extreme fear” territory.
Crypto neophytes might not be accustomed to periodic downturns in the $2.35 trillion space.
“These kinds of ups and downs in the crypto world have become so common they actually have a name for them: Winter,” Federal Reserve Governor Christopher Waller said at a Feb. 9 Global Interdependence Center event.
“So when you start saying something is a season, you know it’s going to be a regular phenomenon. That’s part of the game: You get in, you make some money—you might lose some money—that’s the nature of the beast.”
Several crypto winters have already formed since 2011, driven by regulatory pressures, exchange failures, and a burst in the initial coin offering (ICO) bubble.
These selloffs were followed by sharp rebounds.
Whether there will be six more weeks of a crypto winter or an early spring may depend on several factors, including legislation relating to regulation.
By Andrew Moran
