Bitcoin staged a hair-raising U-turn this week: after a plunge that sent prices to lows not seen in years, the market briefly surged back above roughly $70,300. For traders glued to their screens it looked like the kind of snapback that signals a fresh leg higher. For others, it was an echo of a familiar pattern — a tactical bounce before a deeper decline.
What happened
Thursday’s rout erased a huge chunk of value: bitcoin fell from an October peak above $126,000 to roughly $64,000 in one dramatic stretch. The fall accelerated after a blunt reminder from Treasury Secretary Scott Bessent that the government has neither plans nor the power to bail out bitcoin. That comment, coupled with broader risk-off moves in tech stocks, catalyzed a wave of selling.
Then came Friday’s rebound. Short-covering, bargain hunters and a momentary thaw in institutional flows pushed prices back up. But the rebound didn’t silence skeptics.
Why the bounce feels fragile
Several threads run through this sell-off and the guarded optimism around any recovery.
- Big holders are still active. CryptoQuant flagged heavy deposit activity by whales — large holders moving coins onto exchanges — which often precedes selling or hedging. That concentration of supply can amplify downside pressure if those holders decide to unload.
- Institutional behavior matters. The rise of ETFs and other institutional vehicles helped fuel earlier gains, but analysts say a return of steady, large-scale capital is not guaranteed. Allen Ding of Bitfire Research told reporters that any sustained rally will be constrained by how quickly institutional appetite reappears and by the unwinding of leverage in the market.
- Leverage and shorting amplify moves. Campbell Harvey, a finance professor, has pointed out that modern tools make it easier both to short crypto and to buy with borrowed money. When leveraged positions crack, forced liquidations can accelerate price collapses.
- Mining economics are ominous. CoinDesk estimates the average cost to mine a single bitcoin sits near $87,000 — well above current prices. Historically, when market price drops below miners’ break-even levels, it’s a sign of a bear market and can lead to reduced network activity or miners selling reserves to cover costs.
- Exchange flows: sustained whale deposits onto exchanges would be a red flag for heavy selling.
- Institutional flows: signs that ETFs or custodial players are buying in consistent size would support a firmer floor.
- Miner behavior: if miners begin selling reserves aggressively, price pressure could intensify.
- Leverage metrics: rising forced-liquidation events often precede sharp phases downward.
Voices from the market
Michael Terpin, an early bitcoin investor, predicted a classic “bounce then plunge” scenario: he said the market could spike back above $80,000 and then reverse sharply, exhausting ETF investors into capitulation. Other analysts have been more blunt, suggesting bitcoin could fall toward $40,000–$45,000 if current pressures persist.
Igor Pejic, a tech strategist, noted that bitcoin has behaved more like a risk asset than a safe haven in recent months, tracking sentiment in tech stocks rather than acting as digital gold. That correlation only intensified as AI-driven enthusiasm and concerns roiled tech valuations.
A new front: AI news and tech sentiment
This sell-off didn’t happen in isolation. Headlines about AI breakthroughs — and the threat they pose to certain software businesses — weighed on the Nasdaq and on investor appetite for riskier assets. Major AI announcements can move equity markets and, by extension, cryptos; see the broader market chatter around recent model and product launches such as Microsoft’s MAI‑Image‑1 Microsoft’s MAI‑Image‑1 and other deep‑tech updates that reshape expectations for growth stocks.
Market infrastructure is evolving too. Tools that stitch AI into financial data — for instance, newer research and prediction tools — change how traders form and act on opinions. Services like Google Finance’s newer features for research and prediction markets are part of that shift Google Finance’s Gemini Deep Research.
What investors should watch (without clichés)
There are a few concrete signals that will matter more than punditry:
Why this matters beyond price charts
The current episode probes longstanding claims about bitcoin’s role in portfolios. The Trump administration’s embrace of crypto — from summits to a proposed federal strategic bitcoin reserve — injected political backing and fueled earlier rallies. But the recent tumble has erased gains made since those policies were introduced, underscoring crypto’s continued identity as an extremely volatile asset.
For everyday investors and institutions alike, the result is the same: discipline, transparency on risk, and careful sizing matter. A quick bounce can be seductive; history shows it can also be a setup for a larger correction.
Markets will keep sending signals. Traders will parse whale moves, ETF flows, miner economics and the broader equity landscape. Until those signals point consistently in one direction, any rally should probably be treated as tentative rather than definitive.