02.02.202613:53 Forex Analysis & Reviews: Bitcoin loses faith in itself

Bitcoin closed in the red for the fourth consecutive month — the longest losing streak since 2018. From its record highs in October, BTC/USD has plunged by almost 40%. If history is any guide, we shouldn't expect new peaks in 2026. After the 2021 high it took the crypto 28 months to recover lost ground; after the 2017 bubble, it took three years to return to those levels.

Unlike earlier downturns caused by exchange collapses or other shocks, this time Bitcoin faces a lack of buyers, momentum and confidence. Social media are strangely silent. Optimists are gone.

Volatility dynamics for precious metals and Bitcoin

BTC/USD is not supported by the fact that US stock indices are near record highs — a sign of strong global risk appetite — nor by a weakening US dollar, the currency in which the digital asset is quoted. The crash in precious metals also didn't help. The capital rotation into gold and silver amid rising volatility there was considered one of the main reasons investor interest in Bitcoin waned and prices fell.

It could be worse. After retail investors leave, institutions may follow. BTC/USD's fall below the average levels at which Strategy (the fund) bought tokens raises concerns about an acceleration of selling — especially ahead of the company's Q4 results. From their record highs the fund's shares have plunged 70%, and what happens next is anyone's guess.

Michael Saylor himself is trying to rekindle investor interest with a loud claim that Kevin Warsh would be the most Bitcoin?friendly Fed chair. Indeed, the former FOMC official has said tokens aren't necessarily bad and do not compete with the dollar — rather, he suggested they can serve as an indicator of government effectiveness.

In reality, what used to be perceived as positive for BTC/USD has become a negative. For years Bitcoin was bought as a politically neutral asset, independent of White House policy. Since Donald Trump's return to power it has become dependent — no longer politically neutral — hence the loss of interest and the flight to gold.

Dynamics of BTC slumps

How deep could the cryptocurrency fall? Based on previous episodes, it could be 25–50%. We're talking about a return below 40,000. That prospect will certainly scare crypto enthusiasts. The last time it traded near that level was autumn 2023.

Technically, the daily chart of BTC/USD shows a continuation of the medium?term downtrend. Shorts opened from 90,400 as part of a "fakeout?and?dump" pattern and scaled in from 85,000 should be held. Target levels to the downside are 70,000 and 60,000.