Bitcoin slides to lowest since November 2024
Losses for the year so far now approaching 20%
Latest crypto rout triggered by Warsh nomination, analysts say
The latest rout in cryptocurrencies, which has come hard and fast, was triggered, analysts say, by the nomination of Kevin Warsh as the next Federal Reserve Chair, due to expectations he could shrink the Fed's balance sheet.
Cryptocurrencies have widely been regarded as beneficiaries of a large balance sheet, having tended to rally while the Fed greased money markets with liquidity - a support for 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."
The global crypto market has lost nearly $1.9 trillion in value since hitting a peak of $4.379 trillion in early October, based on data from CoinGecko, with some $800 billion wiped out in the last month alone
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 has left investors less keen 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 U.S. spot bitcoin ETFs witnessed outflows of more than $3 billion in January, following outflows of about $2 billion and $7 billion in December and November respectively.
"This steady selling in our view signals that traditional investors are losing interest, and overall pessimism about crypto is growing," the analysts said.$BTC #ReutersReport #cryptouniverseofficial