Bitcoin has surrendered all of the gains it recorded following the U.S. election in early November 2024, with selling pressure extending into Wednesday and sending prices briefly beneath $72,000. The world's largest cryptocurrency has lost roughly 42% from its October peak above $126,000 and is now widely regarded as being in a bear market.
After a strong 2025 rally driven by expectations around friendlier regulation under the Trump administration, fresh spot ETF inflows and rising institutional participation, bitcoin has reversed course. The sell-off that began after the record high accelerated into 2026, producing steeper losses.
Flows and liquidations cited as near-term drivers
Alex Saunders, an analyst at Citi Research, pointed to concentrated selling dynamics. "Long liquidations and sensitivity to downside in equities and geopolitical risk have weighed on Bitcoin and crypto markets thus far," he said, describing the current environment.
According to Saunders, the flow backdrop for U.S. spot ETFs deteriorated after Oct. 10 last year. "Since Oct 10th last year, we have seen a notable downshift in the flows to U.S. spot ETFs which is a large source of potential new money into the space in our view. This lack of new demand coincided with established long-time holders becoming concerned about cyclical weakness in Bitcoin," he added.
Price action and technical thresholds
On Wednesday, bitcoin slid as much as 5% to an intraday low of $71,913.4, marking its weakest level since early November 2024. Citi's analysis highlights a sequence of meaningful price thresholds investors are now watching. "We believe Bitcoin prices are approaching key levels. We are now below our estimated average U.S. spot-ETF entry price $81.6k and close to the c. $70k pre-U.S. election price," Saunders said.
Those reference points frame the present market psychology: one is the estimated average entry point for investors buying through U.S. spot ETFs, and the other reflects the market's position before the election-driven rally last year.
Regulatory developments could act as a catalyst
Saunders also pointed to ongoing legislative activity as a potential pivot for investor interest. A high-profile bill that passed the House in July 2025 remains stalled in the Senate but is viewed by some as a possible trigger for renewed flows if progress is made.
"We have seen some progress on a Senate bill to be reconciled with the House-passed CLARITY act to start the year. The Finance committee released a draft although it was not met with universal approval and the vote out of committee has been delayed. Senate Ag also advanced its version of the bill," Saunders said.
He noted that "positive news on the regulatory front would be an important catalyst in boosting sentiment and flows in our view," citing previous episodes when ETF inflows rose after key political milestones such as the U.S. election and the passage of legislation in July 2025.
Market participants frame the decline as cyclical, not structural
Other market observers emphasize that the retreat reflects broader macro forces rather than a fundamental breakdown in adoption. Gil Rosen, co-founder of the Blockchain Builders fund, argued that the recent price moves are symptomatic of where bitcoin sits in the macro cycle. "Bitcoin's recent price action isn't a sign that something broke in crypto - it's a reflection of where we are in the broader macro cycle. We clearly overshot earlier, pricing in a straight-line move higher that was never realistic," he said.
Rosen described the reversal as a "reset driven by geopolitics, tariffs, and policy uncertainty," adding that as institutional capital has become more influential, bitcoin behaves more like a conventional risk asset. In that setting, when macro conditions deteriorate, capital tends to rotate away and prices follow.
Nicholas Motz, CIO of Soil.co and CEO of ORQO.digital, linked recent selling to dynamics in other asset markets. He pointed to a violent unwind in the precious metals trade late last week that contributed to a wide risk-off move. "When funds get squeezed on safe havens, they often liquidate their most liquid and profitable positions, such as Bitcoin, to cover losses elsewhere. We are seeing a forced de-leveraging event, not a fundamental shift in crypto adoption," Motz said.
Senad Karaahmetovic contributed to this article.