The weekend saw Bitcoin’s price drop below the $78,000 threshold, intensifying a severe bearish phase that has now persisted for four consecutive months. This marks the cryptocurrency’s most prolonged losing streak since 2018. From its 2025 annual peak, the world’s leading digital asset has shed approximately 40 percent of its value.
Regulatory Appointee Sparks Investor Anxiety
A significant catalyst for the recent acceleration in selling pressure was the announcement that former Federal Reserve Governor Kevin Warsh is poised to become the new head of the U.S. central bank. Perceived as an advocate for restrictive monetary policy, Warsh has publicly called for a “regime change” at the Fed, with plans focused on substantially reducing the central bank’s balance sheet.
Market observers view this as a threat to speculative investments. Brian Jacobsen, Chief Economist at Annex Wealth Management, noted that the inflated Fed balance sheet has historically funneled liquidity into risky assets, including cryptocurrencies—a dynamic that could reverse under new leadership.
Derivatives Signal a Stark Shift in Outlook
A pronounced change in market sentiment is evident within the options market. Data from CoinDesk reveals that open interest for Put options with a $75,000 strike price has surged to $1.159 billion. This figure now nearly matches the $1.168 billion in open interest for Call options at the $100,000 strike—a dramatic reversal from the bullish dominance seen following last year’s presidential election.
Substantial Put positions have also accumulated at the $70,000, $80,000, and $85,000 strike levels. Conversely, higher Call strikes above the $100,000 mark are attracting significantly less interest.
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Market Liquidity Evaporates
The market’s capacity to absorb large trades without major price impact has deteriorated sharply. Kaiko data indicates that available capital to cushion such transactions has fallen more than 30 percent from its October peak. Liquidity conditions this thin were last witnessed following the collapse of FTX in 2022.
The spot Bitcoin ETF market is concurrently experiencing sustained outflows. Many institutional buyers who entered at higher price points are now facing losses. Major participants, such as Digital-Asset-Treasuries, have notably scaled back their purchasing activity following their own portfolio declines last year.
Analysts Foresee a Prolonged Correction
Historical patterns suggest the current correction may have considerable runway left. Kaiko analyst Laurens Fraussen estimates it could continue for another six to nine months, positing that the market is “likely about 25 percent” through the present cycle.
Some forecasts are even more cautious. Richard Hodges, founder of the Ferro BTC Volatility Fund, warns major investors to prepare for a much longer downturn, stating he does not anticipate a new all-time high within the next 1,000 days. Despite regulatory advancements and a pro-crypto agenda under the Trump administration, investor skepticism remains high. Delays in the anticipated market structure legislation have added to the frustration. Meanwhile, capital continues to migrate away from the crypto sector toward AI equities and precious metals.
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