Bitcoin Falls 30% in 2025, Erasing Year’s Gains as Crypto Slump Deepens

Bitcoin has slumped below the $100k level and is trading at around $94k today. Moreover, the market cap has fallen to 1.89 trillion from the previous 2 trillion. The token is trading below the 200-day Simple Moving Average (SMA). With the current slump, Bitcoin has erased more than 30% of this year’s gain. Earlier in the past month, the world’s largest cryptocurrency reached a new all-time high of $126k on October 6, only to plunge in a few days following the record crypto market crash stemming from the reignition of geopolitical tensions between China and the USA.

Since then, the market has been reeling under pressure. Nevertheless, the U.S government shutdown was anticipated to fuel a rally, which did not materialize as the profit-taking took over. The crypto market faced another heavy blow when the policymakers started talking against or taking a neutral stance regarding the December Fed rate cuts, sending the crypto market into a slump. 

What’s Driving the Prices Down? 

The major factor driving the bitcoin price down is the dwindling probability of December Fed rate cuts. According to CME FedWatch, the probability of December Fed rate cuts has decreased to 43%, which was more than 90% in October and around 62% in the past week. The decreasing numbers are forcing investors, both institutional and retail, to move away from risk-taking.   

Commenting on the current market scenario, Matthew Hougan, chief investment officer for Bitwise Asset Management, stated that the sentiment in crypto retail was pretty negative. He further mentioned that investors did not want to live through another 50% pullback and noted that people were front-running that by stepping out of the market. Yet, many, including him, are seeing the current price dip as a buy-a-dip opportunity. 

The institutional activity has also slowed down, further exacerbating the downturn. The BTC Exchange Traded Fund (ETF) has entered the red with $492.10 million net outflows on Friday, November 14. The ETF flows formed a large part of the investment this year, reaching over $25 billion, but the slowdown of the same clearly shows the mounting selling pressure in the market. The current macro uncertainty also coincided with profit-taking from long-term holders, further decreasing investor confidence. 

The reopening of the government after the longest shutdown in U.S history was anticipated to bring a rally, but the profit-taking has led to a technical breakdown, bringing the bitcoin down to $100k level. The waning euphoria over the pro-crypto policies of President Trump is further contributing to crypto market gloom. 

Implications for the Broader Crypto Market: Another Crypto Crash is On the Horizon?

Being the most valued and adopted digital currency, the plunging price of Bitcoin could drag down the entire crypto market. The market cap of the whole crypto market has touched 3.24 trillion; it was 4 trillion when Bitcoin hit an all-time high of $126k. The altcoins are also feeling the brunt, and with flagship tokens such as Etherium (ETH), Binance coin (BNB), and Solana (SOL) all trading in red. The Fear and Greed Index value of 17 suggests extreme fear. A strong rebound from Bitcoin may lift the market, but the market lacks a strong macro signal. 

The Bottom Line: The Crypto Market Outlook and What to Watch

The current downturn is largely due to macro pressure. Easing of the same with a stimulus like passing the pending pro-crypto legislation may bring some reprieve to the market. Nonetheless, the long-term potential for Bitcoin remains solid with strong fundamentals, and predictions remain bullish. It’s also worth noting that the liquidity remains crucial for the market. The investors are advised to follow a cautious approach amid the uncertainties.