Bitcoin may be stabilising this morning, but it is doing so with a limp.
After crashing-landing from October’s record burst above $126,000, the cryptocurrency has finally found support just over $95,000, rising 2% in early London trading as bargain hunters edge back in. Even so, the market feels rattled.
The slide has been swift. Bitcoin is down almost a quarter in a matter of weeks and has lost 6% in the past seven days.
The reasons are not mysterious: a cocktail of forced selling, overextended leverage and a souring macro backdrop has drained confidence.
A spike in trade tensions earlier this month triggered a sharp liquidation across highly leveraged crypto positions. Retail traders who had piled into crypto-adjacent stocks also took heavy losses, adding to the selling pressure.
At the same time, capital that once chased Bitcoin as an inflation hedge has drifted towards equities and gold, both of which have hit fresh highs.
There is also the fear factor. Some traders worry that the four-year halving cycle is repeating its familiar script of euphoria followed by a bruising comedown.
Others think institutional buyers, after months of inflows through exchange-traded funds, have shifted to the sidelines until volatility settles.
The result is a market long on hope but short on conviction. Supporters point to improving liquidity conditions now that the US government shutdown is over, while sceptics see Bitcoin behaving like the risk asset it has always been.
This morning’s bounce helps. It does not yet heal the cracks.