Bitcoin recorded one of its steepest declines of the year on Thursday, falling more than 7 per cent to slip below $62,000 as investors pulled back from risk assets amid rising geopolitical tensions and weakening institutional demand.
The world’s largest cryptocurrency dropped to its lowest level since February, extending a broader correction that has now erased more than half of its value from the all-time high of $126,210 reached in October last year. According to market data, Bitcoin’s total valuation has fallen to around $1.24 trillion, nearly half of its peak of $2.48 trillion.
The latest downturn reflects a combination of pressures building across global financial markets. Escalating tensions in the Middle East, uncertainty over US monetary policy, and slowing inflows into Bitcoin exchange-traded funds have all contributed to a sharp shift in sentiment. At the same time, a wave of forced selling in leveraged positions intensified the sell-off.
More than $1.1 billion in leveraged crypto trades were liquidated within 24 hours, according to market trackers. These liquidations occur when traders using borrowed funds are forced to exit positions after prices move against them, triggering automated selling that can accelerate declines and create a cascading effect across the market.
Market analysts say the behaviour of cryptocurrencies is increasingly mirroring that of high-risk technology stocks rather than acting as alternative safe-haven assets. As uncertainty rises globally, investors have shifted toward traditional defensive assets such as gold, US Treasury bonds and the dollar.
Gold prices have remained elevated above $4,500 an ounce this year, while Bitcoin—often described as “digital gold”—has struggled to attract similar safe-haven demand. Instead, investors appear to favour assets with a longer track record of stability during periods of geopolitical stress.
“The current environment is defined by risk aversion,” analysts noted, adding that investors typically reduce exposure to volatile assets first when uncertainty increases, with cryptocurrencies among the most affected.
Institutional demand, which played a key role in Bitcoin’s surge to record highs last year, has also weakened. Earlier momentum was driven by strong inflows into US spot Bitcoin ETFs, opening access to pension funds and large asset managers. Recent data, however, indicates that inflows have slowed as investors reassess exposure amid weaker economic expectations.
Attention is also focused on the US Federal Reserve, where interest rate policy remains uncertain. Higher-for-longer rates generally weigh on non-yielding assets such as cryptocurrencies, as safer fixed-income investments become more attractive.
Despite the sharp correction, some long-term investors argue that such volatility is typical in Bitcoin’s market cycles, which have historically included steep drawdowns followed by recoveries. Even so, analysts warn that near-term sentiment has deteriorated, with expectations of a quick rebound fading.
For now, Bitcoin remains caught between long-term optimism about digital assets and immediate pressures from geopolitical risk, tighter financial conditions and fading institutional support.
