A Week of Bitcoin's "Plunge"
U.S. Experts Are Deeply Divided
Hit a 15?Month Low on the 5th
Experts Interpret It as "Investor Sentiment Moving Elsewhere"
Some Also Cite the Impact of the Fed Chair Nomination
The price of Bitcoin has plunged over the past week to about half of the all-time high reached in October last year. Although there have been sharp drops in Bitcoin prices in the past, interpretations of the causes of this crash are diverging.
On the 6th, Bitcoin prices were displayed on an electronic billboard at the Bithumb Lounge in Gangnam-gu, Seoul. According to U.S. cryptocurrency exchange Coinbase, as of 1 p.m. EDT on the 5th (local time), the price of one Bitcoin was $66,060, down about 8% from 24 hours earlier. This is the lowest closing price in about 15 months, since late October 2024. Yonhap News Agency
On the 7th (local time), the Wall Street Journal (WSJ) reported that Bitcoin experts are offering differing analyses on the causes of the latest Bitcoin plunge. Anthony Scaramucci, founder of SkyBridge Capital, told the WSJ, "If you ask five experts, you will get five different explanations."
On January 31 (local time), the price of Bitcoin fell below $80,000 per coin for the first time in about nine months, and on the 5th it broke below the $70,000 mark, hitting a 15?month low. It was the largest single?day drop in nearly three years since November 2022. Then on the 6th, it jumped 17%, recovering the $70,000 level. Ethereum, the second?largest cryptocurrency by market capitalization, also once fell to $1,745 before recovering the $2,000 level on the 6th.
One line of analysis from experts is that cryptocurrency investors have shifted their attention to other assets such as gold, silver, and artificial intelligence (AI). Anthony Pompliano, CEO of Professional Capital, analyzed that "there are now many other areas where people can go and speculate, such as AI and prediction markets."
Another analysis points to former Federal Reserve Governor Kevin Warsh, who has been designated as the next Fed Chair, as a cause. As Warsh is known to be a "hawk" who prefers interest rate hikes as a tool to curb inflation and to support a strong dollar, dollar alternative assets including Bitcoin and gold are said to have fallen across the board. However, Warsh has aligned himself with President Donald Trump's stance favoring interest rate cuts, and in the past he has also expressed a positive view on Bitcoin.
Michael Novogratz, CEO of cryptocurrency?focused asset management firm Galaxy Digital, and others have offered a simpler explanation that the plunge was driven by continued selling from investors taking profits after last year’s Bitcoin rally. President Trump, who has maintained a crypto?friendly stance, rolled out a series of cryptocurrency promotion policies after returning to the White House last year. As President Trump signaled full?fledged support through actions such as signing an executive order on strategic reserves of cryptocurrencies, requesting legislation to ease government regulations, and hosting a White House Digital Assets Summit, cryptocurrency prices continued to rise. As a result, in October last year the price of Bitcoin was up 80% compared with the time of the U.S. presidential election in November 2024.
The WSJ reported that, although there is no consensus explanation among experts for this week’s Bitcoin price crash, some analysts expect that this "winter" could pass more quickly than in the past.
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