Bitcoin's price has plunged, sending a fresh chill through the virtual asset market. Bitcoin, the world's largest virtual asset, fell about 44% from its October high last year, dropping below the $63,000 level. It is the lowest in 16 months. While a sharp drop in prices is not unfamiliar given the volatility of the virtual asset market, some say this decline is notable because it runs counter to the market environment.
On the 5th (local time), according to the New York Times (NYT), CNN and others, recent global financial markets have seen risk-off sentiment strengthen amid geopolitical tensions and policy uncertainty. Heightened instability in the Middle East, expanding trade conflicts, and a broad-based adjustment in the tech industry have combined to push up the stock market's volatility gauges. Such an environment typically stokes demand for safe havens. In fact, gold prices hit a record high, surpassing $5,500 per ounce.
Bitcoin, by contrast, moved in the opposite direction. The virtual asset industry has long labeled Bitcoin as "digital gold," on the logic that it would serve as a store of value in times of crisis. But in this correction phase, Bitcoin behaved like a risk asset, not a safe haven. While gold prices climbed, Bitcoin fell further, and the gap between the two assets widened.
Experts say the very narrative of "digital gold" has been shaken in the process. As market anxiety grew, investors viewed Bitcoin not as something to buy but as an asset to cash out. The analysis is that it became one of the first assets to be unwound in a risk-off phase. In fact, some hedge fund investors were reported to have sold even their gold and silver positions to cover losses in virtual assets.
Political expectations have also weakened. The virtual asset market surged last year, buoyed by President Donald Trump's pro-virtual asset stance. Trump pledged deregulation and industry promotion, and the so-called "Trump effect" lifted Bitcoin's price. But recently, Bitcoin's price has fallen below even the level just before Trump's election. That means policy expectations failed to translate into real demand.
Institutional investment flows have also cooled. Bitcoin spot exchange-traded funds (ETFs) failed to attract as much capital as hoped at launch, and trading volume has declined in recent months. As institutional demand weakened, retail investors' anxiety spread more quickly. On top of that, the U.S. Treasury reaffirmed it lacks authority to directly intervene to stabilize the virtual asset market, erasing hopes for a policy "safety net."
Virtual asset corporations' earnings and stock prices also took a direct hit. Major exchanges moved to cut staff and scale back businesses, and losses widened at publicly traded corporations holding large amounts of Bitcoin. Within the industry, some assess this correction as one of the most severe downturns since the collapse of the virtual asset exchange FTX in 2022.
Still, some say the drop does not mean the end of the virtual asset market. In the past, Bitcoin also plunged due to incidents such as the hacking of the Mt. Gox exchange, the collapse of initial coin offerings (ICOs), and major exchange bankruptcies, but it rebounded after a period of time. The issue is that this correction is once again raising fundamental questions about Bitcoin's identity.
Experts note that "Bitcoin is still being traded as a high-risk asset similar to tech stocks." To truly establish itself as a safe haven, it needs lower volatility and restored trust, but the perception is spreading that the market has once again entered a downturn.