Crypto crash accelerates as investors flee risky assets

Bitcoin’s plunge accelerated on Thursday, as the world’s largest cryptocurrency fell to around $67,000 in morning trading, a level not seen since October 2024. The moves underscore how vulnerable cryptocurrencies can be when investors turn away from risk.

The sharp drop was a reversal from late last year, when bitcoin surged to record highs above $125,000 a coin. In the four months since then, the digital currency has lost nearly half its value.

The selling comes as investors pull back from riskier assets like crypto and tech stocks, and rotate into traditional “safe haven” assets like gold.

Since bitcoin’s October peak, the gap between its performance and gold’s has widened significantly. As of Thursday morning, the value of bitcoin had fallen 32% since February of 2025, while the value of gold has soared 68%.

This year alone, gold is up more than 14% while bitcoin is down more than 20%.

As crypto plummets, the U.S. dollar is also feeling the heat of wary investors who are rethinking where they put their assets.

For the greenback, the downward pressure stems from renewed trade and tariff threats from the Trump administration and overall uncertainty generated by tensions with U.S. allies over Greenland, the protests in Iran and the capture of Venezuela’s president early in January.

As they pull out of crypto, investors have sought safer assets in Treasury bonds, European and Asia stocks and precious metals like silver and gold.

The ripple effect

The bitcoin crash is especially worrying for the rest of the crypto industry. Bitcoin has long been marketed as “digital gold,” essentially the most reliable crypto asset and one capable of holding its value in periods of heightened uncertainty, much like physical gold.

Analysts at Citi wrote in a note to clients this week that the flow of money into bitcoin exchange traded funds, or ETFs, has dried up as prices continue to slide. These investments helped fuel bitcoin’s rise last year.

They also noted that bitcoin has now fallen below the average entry price for many U.S. spot bitcoin ETF investors, which Citi estimated at about $81,600.

The pullback is also proving painful for companies and investors that leaned heavily into bitcoin during the rally.

Shares of Strategy, the largest corporate holder of bitcoin, fell over 10% early Thursday as bitcoin sank toward levels below what the company paid for its massive crypto stockpile.

Strategy has spent years building its bitcoin position and now holds more than 713,000 coins, having paid an average of roughly $76,000 per bitcoin, according to its latest regulatory filing.

But now, with bitcoin now firmly below that level, investors are growing uneasy about how much room there is for further losses.

That pressure is now rippling across the broader crypto ecosystem, hitting businesses closely tied to cryptocurrency trading and prices.

Shares of Coinbase, one of the largest U.S. crypto exchanges; Circle, a crypto-focused financial firm and stablecoin issuer; and trading platform Robinhood are all falling along with bitcoin.

Vibes from Washington

Trump’s selection of former Fed governor Kevin Warsh to be his nominee for Federal Reserve chair has also triggered a reset in assets.

Despite Trump’s insistence that any Fed chair pick he made needed to support lower interest rates, Warsh is seen as someone with a track record of taking a tougher line on inflation than some of Trump’s other candidates.

Markets are also betting that Warsh will not be quick to juice markets with interest rate cuts. Higher interest rates and less fluid capital typically make it harder for investors to sustain high-risk bets like crypto.

Bessent said this week in Washington that the U.S. government does not have the power to step in and support cryptocurrencies in the event of a crash, dimming hopes of a rescue, even from an administration that has largely embraced crypto.

Despite the positive reception from the White House, crypto is still struggling to get clear rules to govern its markets approved in Congress.

“Although there has been progress on crypto legislation, the pace has been slow and uneven.”

Lawmakers have advanced pieces of crypto-related legislation in recent months, including efforts to clarify how digital assets are regulated and how stablecoins should be overseen.

But broader market-structure rules, seen as critical for bringing more certainty to the sector, remain stalled in Congress.

As a result, some investors remain bearish on bitcoin, even if clearer rules are eventually put into place.

“Even if regulatory clarity is passed, many investors may still be cautious about putting money into such a volatile asset class,” Louis Navellier, an investment manager and market strategist at Navellier & Associates, wrote on Wednesday.