Bitcoin continues to decline, and the crypto market is falling into a "crisis of confidence"

On Wednesday (February 4), Bitcoin briefly dropped to around $72,000, a level not seen in 15 months. Currently, there is a widespread risk-averse sentiment in global markets, and the entire market is in a downturn.

This largest global cryptocurrency has been on a decline since reaching its peak last October, with its price down more than 40% from its high.

On Wednesday, Bitcoin fell as much as 5.4%, briefly dropping to $72,047, the lowest level since November 6, 2024 (the day Donald Trump won the U.S. presidential election).

“Crisis of Confidence”

An increasing number of investors are beginning to doubt Bitcoin’s role as a safe haven under market pressure. Since the end of last month, the entire cryptocurrency market has lost over $460 billion in value.

Shiliang Tang, managing partner at asset management firm Monarq Asset Management, said, “The current cryptocurrency market is experiencing a ‘crisis of confidence’.”

Tang pointed out that while the previous decline was driven by liquidations related to cryptocurrencies, the pressure on Wednesday was related to broader cross-asset stress. On Wednesday (February 4), the market entered a synchronized sell-off phase, with the Nasdaq 100 index briefly falling over 2%, and selling sentiment spreading to software, chip manufacturers, and other rate-sensitive sectors.

Another investor sharing a similar view is Michael Novogratz, CEO of Galaxy Digital. He also stated, “In the past, there was an almost religious belief that ‘you must hold Bitcoin no matter what.’ But somehow, this belief or enthusiasm has faded, and the market has started to sell off.”

Regarding Bitcoin’s outlook, FxPro chief market analyst Alex Kuptsikevich noted in a report, “Although there was some rebound during the process, the pattern of lower highs and lower lows indicates that the market remains primarily in a sell-on-rises mode.”

The “big bear” Michael Burry also warned this week that Bitcoin has exposed its nature as a purely speculative asset and has failed to establish a hedge function like precious metals.

In contrast, Greg Guttas, head of OTC trading at crypto investment firm Flowdesk, was somewhat more optimistic. He pointed out, “What we are seeing more is Bitcoin and the Nasdaq index falling in sync over the past two days, without much panic among clients.”