What happened to Bitcoin? Its value has dropped by over $1 trillion in 8 months.

Bitcoin lost over $1 trillion in just 8 months, driven by pressure from high interest rates, the AI ​​investment trend, and questions about the role of cryptocurrency as a hedge against risk.

June 10, 2569 at 03.01:XNUMX a.m., CNN reported that Bitcoin is facing one of its most difficult periods in years, after its price plummeted by more than half from its all-time high of $126,000 at the end of last year, falling just above $60,000. This resulted in the loss of over $1.2 trillion in the cryptocurrency market value in just eight months, wiping out all the returns generated during President Donald Trump's second term.

Last Friday, Bitcoin plummeted to its lowest level since before the 2024 US presidential election, a stark contrast to the atmosphere at the start of Trump's second term, when investors expected a more friendly administration towards the crypto industry, pushing Bitcoin past $100,000 for the first time in history just one month after the election.

However, investor sentiment has shifted dramatically, with Bitcoin falling nearly 30% since the beginning of the year and more than 6% since Trump took office, while the S&P 500 index has risen nearly 10% this year and is up more than 30% compared to the start of Trump's term.

The prolonged eight-month correction has led some investors to sell off assets, while others are questioning whether cryptocurrencies still play a role as a diversification asset. BlackRock's Bitcoin ETF experienced net outflows on every trading day between May 15th and June 3rd, according to Farside Investors.

During the outbreak of the Iran-Iran conflict in late February, Bitcoin surged on hopes of regaining its role as digital gold or a hedge against uncertainty. However, it ultimately failed to maintain that positive momentum.

Conversely, the US stock market recovered rapidly from the pressure of the war and continued to reach new all-time highs, while gold, although relatively stable this year, has risen more than 60% since Trump returned to the White House.

Mark Cuban, a renowned investor and former judge on the show Shark Tank. He said he was disappointed with Bitcoin's role as a hedge asset.

"I think Bitcoin has gone astray. It's not the hedge asset I expected, and that's very disappointing to me." Cuban said, adding that he had already sold most of his Bitcoin.

One of the key factors pressuring Bitcoin is the increasing investor interest in artificial intelligence (AI), particularly the surge in investments in technology stocks and large IPOs such as SpaceX, Anthropic, and OpenAI.

Jonathan Beer, CEO of Farside Investors. It is believed that a large amount of speculative capital may be flowing out of Bitcoin in order to pursue returns from AI businesses instead.

Another factor is uncertainty surrounding inflation and the direction of interest rates from the Federal Reserve (Fed). Following stronger-than-expected economic and labor market data, investors are beginning to adjust their views, suggesting the Fed may keep interest rates high for longer than previously estimated.

Jerry O'Shea, Head of Market Insight at Hashdex Asset Management. It is said that digital assets tend to benefit during periods of high liquidity and low interest rates in the financial system. Therefore, uncertainty about monetary policy becomes a source of pressure on cryptocurrencies.

Furthermore, the market faced selling pressure from forced closing of positions (liquidation) by investors who had used borrowed money for speculation. Data from CoinGlass indicates that approximately $2,500 billion worth of long Bitcoin positions were closed within just 5 days earlier this month.

Another factor that shook the market was the move by Strategy, one of the world's largest Bitcoin holders. The company revealed last week that it sold 32 Bitcoins for the first time since 2565, causing the price of Bitcoin to plummet by over 17% in a single week – its sharpest weekly drop since November 2565.

However, Strategy bought another 1,550 Bitcoin on Monday, helping the crypto market recover partially.

Although Bitcoin continues to face pressure, some digital coins have generated outstanding returns against the market trend. HYPE, a coin associated with the cryptocurrency trading platform Hyperliquid, has risen over 150% since the beginning of the year.

Meanwhile, analysts believe that a key factor determining the direction of the crypto industry in the coming period is the US Clarity Act, which is currently under consideration by Congress.

The law aims to establish a clear regulatory framework for digital assets, including stablecoins and other major digital assets such as Ethereum, which could help increase credibility and attract investment to the industry.

Hashdex analysts believe that if the CLARITY Act is approved, it could become a key catalyst in restoring confidence and driving the value of digital assets in the next phase.

"Many people who once believed that crypto was over may change their perspective now that the US has clear legislation supporting the industry and opening the way for more capital to flow into the market," O'Shea said.

refer : edition.cnn.com

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