Bitcoin Has Tipped Into A Bear Market, Slipping 23% From January Highs

Getty Images; Jenny Chang-Rodriguez/BI

• Bitcoin is in bear market territory after falling as much as 23% from its January peak.
• Bitcoin ETF investors have pulled over $1 billion on Tuesday as confidence in crypto drops.
• Altcoins are also suffering amid risk-off sentiment and a recent crypto exchange hack.

A stretch of crypto scandals, disappointing policy updates, and one big hack have helped push bitcoin into bear market territory this week.

The aggressive sell-off has pushed the price of the top token down as much as 23.4% from January's record price of $109,350. By Wednesday afternoon, bitcoin fell to an intraday low of $83,740.

A 20% decline from the most recent peak is the technical definition of a bear market, and the sharp drop marks a major turnaround for an asset that, just a month ago, was shattering all-time highs as it rode a wave of bullish momentum.

Instead, a series of factors has damaged confidence in the crypto sector, sparking investor flight. On Tuesday, spot bitcoin ETFs hemorrhaged a record amount of funds in one day: outflows reached over $1.1 billion, according to Farside data.

"These types of losses rarely end well and I still think the big capitulation is yet to come," Geoff Kendrick, head of digital assets research at Standard Chartered, said in written commentary Wednesday.

A day prior, he warned that bitcoin's price could drop as low as $80,000, though others predict the decline could go as far as $71,000.

The apex cryptocurrency first lost its footing after investors grew disappointed by policies enacted so far by the Trump administration. Though the new White House ran on an crypto-friendly platform, traders hoped for more immediate and aggressive policy actions to uplift the sector.

Rather, one of President Donald Trump's earliest crypto actions was the creation of a memecoin, whose price swings cost some investors millions. Industry insiders have expressed dismay at the launch, while others have blamed it for accelerating a memecoin gambling trend that is eroding trust in crypto. Celebrities, and even Argentine president Javier Milei, have fallen into hot water for promoting volatile memecoins.

A broad risk-off sentiment is also to blame for bitcoin's slump, made worse by last week's nearly $1.5 billion hack of the crypto-exchange Bybit.

Things have been particularly painful for altcoins, as well. Most have completely erased Trump-led gains, according to 21Shares research strategist Matt Mena.

"The total crypto market cap (excluding BTC, ETH, and stablecoins) peaked at $1 trillion in December but has since fallen to $600 billion," he wrote Tuesday.

The throng of headwinds has pulled the cryptocurrency Fear and Greed index to 21, or just around "extreme fear" territory. Though FxPro chief market analyst Alex Kuptsikevich considers this a necessary pullback for "greedy speculators" to enter the market, it's now a question of whether such investors have the courage to start buying crypto.

However deep the bitcoin correction ultimately proves to be, long-term optimism is still high.

Mena noted that on-chain signals still suggest an early-to-mid bull cycle, and pointed out that crypto bull markets typically end when leverage is excessive and bitcoin dominance slides. So far, the latter has risen to 62%, as altcoins underperform.