Bitcoin continues to plunge in value months after record crash

Bitcoin is teetering on the brink of falling below the crucial $70,000 mark, as the world's largest cryptocurrency continues its sharp decline, with Ether also experiencing significant losses.

Bitcoin plummeted over 3 per cent during the Asian trading session, reaching $70,052.38, its lowest level since November 2024.

Ether, the world's second-largest cryptocurrency, was similarly down nearly 2 per cent at $2,086.11. A drop below $2,000 would mark the first time since May last year.

Analysts suggest this rapid cryptocurrency rout has been triggered by the nomination of Kevin Warsh as the next Federal Reserve Chair.

Expectations that Warsh could move to shrink the Fed's balance sheet are cited as the primary concern.

This week alone, Bitcoin has shed more than 7 per cent of its value, bringing its year-to-date losses to almost 20 per cent. Ether has fared even worse, down nearly 30 per cent this year.

Digital currencies have historically thrived on expansive central bank balance sheets, often rallying when the Federal Reserve injected liquidity into money markets, thereby supporting speculative assets.

"The market fears a hawk with him," said Manuel Villegas Franceschi from the next generation research team at Julius Baer. "A smaller balance sheet is not going to provide any tailwinds for crypto."

To be sure, cryptocurrencies have struggled for months since a record crash last October sent bitcoin tumbling from a peak as leveraged positions got washed out.

That's left investors cooling on digital assets and sentiment towards the industry fragile.

"We believe this broader decline is mainly driven by massive withdrawals from institutional ETFs. These funds have seen billions of dollars flow out each month since the Oct 2025 downturn," Deutsche Bank analysts said in a note to clients.

They added that US spot bitcoin ETFs witnessed outflows of more than $3 billion in January, following outflows of about $2 billion and $7 billion in December and November respectively.

"This steady selling in our view signals that traditional investors are losing interest, and overall pessimism about crypto is growing," the analysts said.