Bitcoin fell to 70 thousand. dollars, cryptocurrency collapse. It hasn't been this low since 2024.
The nomination of Kevin Warsh as the head of the Federal Reserve by Donald Trump triggered a number of dynamic events on global financial markets. In the case of cryptocurrencies, it is as if the US president lit a fuse under a large beam of TNT. The ultra-speculative market turned out to be very sensitive to the potential strengthening of the dollar and a possible reduction in the overhang of fiat money.
According to Reuters, analysts expect that the new president may reduce the Federal Reserve's balance sheet, i.e. reduce what the Fed has printed over the years as part of the so-called quantitative easing. This may be a preparation for a possible reduction in the role of the dollar as a reserve currency in the world. Reducing the US central bank's balance sheet will protect against the impact of such steps by other central banks on inflation.
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“Cryptocurrencies are widely seen as a beneficiary of a large balance sheet because they tended to rise as the Federal Reserve injected liquidity into money markets to support speculative assets,” Reuters writes. In other words, the crypto market was a safety valve that ensured that the new money had somewhere to go and did not affect, for example, inflation.
“The market is afraid of the hawk,” Manuel Villegas Franceschi of Julius Baer's next-generation research team told Reuters. “A smaller balance sheet will not provide any benefits to cryptocurrencies,” he added.
Federal Reserve assets have declined from a peak in March 2022, from $8.9 trillion. up to USD 6.6 trillion at the end of December 2025
Central bank assets Dec 25
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Bitcoin loses 7% in 24 hours on Thursday. and as much as 20 percent within a week. The rate was even close to breaking down the key level of 70,000. dollars, reaching 70 thousand. $12 Then it rebounded above 71,000. hole. The price of the second cryptocurrency on the market, i.e ethereum behaves similarly (-7 percent in 24 hours), and loses up to 28 percent within a week.
USD 750 billion less in two weeks
The capitalization of the entire market decreases by over 6 percent on Thursday. less than $2.4 trillion This by as much as USD 750 billion. less than January 19 this year. Compared to the historic peak on October 7 last year. the decline is as much as USD 1.86 trillion, i.e. the market has already fallen by 43%. This can already be called a crash, and certainly a “sharp correction”.
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Changes in the capitalization of all tokens in the range of USD 2.9-3.2 trillion. lasted from November 16 to January 13. For a few days it went up to USD 3.3 trillion, then it went back to the range, and since Warsh's nomination we have already had a serious decline.
Extreme market oversold in Bitcoin
Effect? For those who like technical analysis, important information is that the relative strength index (RSI) on bitcoin indicates extreme market oversoldbecause it is 21 points. The situation on ethereum is not much better, because here the indicator dropped to 23. Does this mean that there is a chance for a breakout? Nothing could be further from the truth. For years, bitcoin and other cryptocurrencies have grown for purely speculative reasons on the principle of “it grows because it grows”, without looking at how much it is really worth and what the fundamentals are.
Fundamental value measured according to bitcoin transactions made on the real market according to Glassnode website estimates as of January 24 was 56 thousand hole. This is one of the strongest fundamental “floors” for the world's largest cryptocurrency. The real turnover shows that this is how much it is really worth compared to the American fiat currency.
Author: Jacek Frączyk, editor of Business Insider Polska
