Six Headwinds Hit Bitcoin as Funds Shift to AI and Gold and Quantum Fears Loom

▲ Bitcoin (BTC)

An analysis suggests that Bitcoin’s sharp decline stems not from a single negative factor but from a combination of forces occurring simultaneously, including large-scale selling by long-term holders, a shift in market attention, and overlapping policy and technological risks.

According to FXStreet on February 7 (local time), Matt Hougan, Chief Investment Officer of asset manager Bitwise, outlined six reasons for the recent cryptocurrency market downturn in a letter to investors. He highlighted as a key factor that long-term holders sold more than $100 billion worth of Bitcoin (BTC) over the past year, proactively preparing for the downturn phase of the four-year cycle.

Historically, Bitcoin has repeated a cyclical pattern of three years of gains followed by one year of correction, as seen in 2014, 2018, and 2022. While there were expectations that the launch of spot Bitcoin and Ethereum (ETH) ETFs would change this trajectory, concerns among long-term investors that the cycle would repeat instead fueled selling pressure and intensified the correction.

A shift in investor interest toward artificial intelligence (AI) stocks and precious metals such as gold and silver was also cited as a factor weakening the appeal of the cryptocurrency market. Assets that once sat at the center of market attention for their volatility and narratives have ceded prominence to other asset classes, slowing capital inflows.

Additional contributing factors included leveraged liquidations on October 10 last year, hawkish views surrounding the prospect of Kevin Warsh as a Federal Reserve chair candidate, the recent broad risk-off market environment, and concerns over the potential threat quantum computing could pose to Bitcoin’s security. Hougan also noted that some early investors may remain on the sidelines until responses to quantum risks become clearer.

However, he assessed that the recent correction is not necessarily a purely negative signal. Bitcoin recently plunged 14% in a single day to around $60,000, and liquidations over the past few weeks exceeded $10 billion, but the asset class itself has matured compared with the past. According to internal Bitwise models, the probability that the market is approaching a bottom is increasing, and the current range could represent a medium- to long-term buying opportunity.

As potential catalysts for a rebound, Hougan cited the passage of the Clarity Act, a U.S. crypto market structure bill, progress in technological integration between AI and cryptocurrencies, expanding expectations for interest rate cuts, advances in mitigating quantum threats, and a renewed shift toward risk asset preference. He emphasized that absent a positive shock, it may take time to form a bottom, but what investors need most is patience and a long-term perspective. At the time of writing, Bitcoin has rebounded more than 9% over 24 hours intraday and is attempting to recover the $70,000 level.

*Disclaimer: This article is provided for investment reference only and does not assume responsibility for investment losses incurred based on it. The content should be interpreted solely for informational purposes.*

속보는 코인리더스 텔레그램으로 (클릭)

t.me/coinreadersofficial

속보는 코인리더스 텔레그램으로 (클릭)

t.me/coinreadersofficial