Bitcoin slid through the $70,000 mark this week, wiping out the gains it had amassed since the 2024 US election and leaving traders scrambling to explain what one market veteran bluntly called a “crisis of faith.” The world’s largest crypto fell more than 7% in a single session and is down roughly 20% so far this year after a steady decline that began in mid‑January.
What happened and why it matters
At the surface this looks like a classic crypto sell‑off: rapid price drops that trigger liquidations, which in turn accelerate the fall. But the backdrop is distinctly political. Much of bitcoin’s meteoric advance over the past 18 months was fueled by expectations that the current US administration would take a light regulatory touch toward digital assets. Campaign pledges and headline actions—like proposals for a strategic crypto reserve—empowered investors and institutions to treat bitcoin more like a macro asset than a speculative fringe play.
Now those expectations are fraying. A Trump‑backed bill to set clearer rules for trading has stalled amid disputes between banks and crypto firms, and questions around the fledgling World Liberty Financial—President Trump’s own crypto venture—have drawn offers of oversight from lawmakers. Political uncertainty of that sort matters to markets because it changes the entire risk calculus for big buyers: fewer guarantees of favorable rules means less appetite for large, leveraged bets.
Ripples beyond bitcoin
The decline hasn’t been confined to crypto. Commodities and equities felt the tremor: silver plunged sharply, and benchmark indices in parts of Asia posted losses. That cross‑market weakness underscores an uncomfortable fact for investors—crypto is no longer a contained niche. When sentiment flips, it flows through margin calls and risk‑on allocations across asset classes.
Traders describe this phase as more than technical selling. It’s a confidence event: when the narrative that supported speculative positioning cracks, many participants head for the exits at once. That dynamic helps explain how bitcoin, which traded above $100,000 at multiple points in 2024–25 and peaked above $127,000 last October, can lose a large chunk of value in a relatively short time.
AI, data and the next leg of market behavior
The way people find and act on market information is changing too. New tools that stitch together financial data, prediction markets and conversational AI are filtering into how retail and some institutional traders form views—making reaction times faster and information cascades steeper. Recent innovations in finance‑focused AI tools are reshaping how traders source angle and momentum signals, which can amplify moves once they start.Google Finance’s new Gemini‑powered features have begun to fold prediction tools into live market screens, and broader AI research tools are nudging how desks and individuals parse earnings, filings and rumor flows as seen in work tying Gemini into Gmail, Drive and Chat.
What could happen next
No one has a reliable crystal ball. The price action could attract bargain hunters: prolonged weakness often offers buying windows for those convinced by bitcoin’s long‑term narrative. Alternatively, if political scrutiny intensifies or legislative clarity remains elusive, larger institutions may pull back further, shrinking liquidity and increasing volatility.
For investors, the immediate questions are practical: how much downside can leveraged positions tolerate, who is holding the long‑dated risk, and whether regulatory clarity will be forthcoming or further delayed. For traders, the episode is a reminder that crypto’s biggest drivers are not only technology and adoption but also the messy, unpredictable realm of politics and policy.
Markets move fast; narratives even faster. This week’s tumble didn’t come out of nowhere, but it will reshape the conversation about risk—perhaps for weeks to come.