Bitcoin sinks to post-election low

Bitcoin slid to its weakest level since Donald Trump’s election victory, underscoring how fragile sentiment has become across digital-asset markets as tighter financial conditions, regulatory uncertainty and profit-taking converge.

The world’s largest cryptocurrency fell sharply in volatile trading, extending a multi-week decline that has erased a large portion of gains built up earlier in the cycle. Prices moved to levels last seen shortly after Trump secured the White House in November 2016, a reference point frequently used by traders to frame long-term market drawdowns. The move dragged down a broad swathe of tokens, while derivatives markets recorded elevated liquidations as leveraged positions were unwound.

Donald Trump’s election victory remains a symbolic marker for many investors because it preceded one of Bitcoin’s earliest mainstream rallies. Falling below that threshold has sharpened debate about whether the market is undergoing a prolonged reset rather than a short-lived correction. Market participants pointed to a mix of macroeconomic and crypto-specific pressures that have gathered pace over the past several weeks.

Central among them is the persistence of restrictive monetary policy in major economies. Higher interest rates have lifted returns on cash and government bonds, reducing the appeal of speculative assets that do not generate income. Risk appetite has been further dampened by expectations that rate cuts, once widely anticipated, may be slower and more limited than previously assumed. That shift has weighed heavily on technology shares as well as cryptocurrencies, which many investors still treat as high-beta risk assets.

At the same time, the digital-asset sector has been grappling with regulatory headwinds. Policymakers in several jurisdictions have intensified scrutiny of exchanges, stablecoins and decentralised finance platforms, adding to compliance costs and legal uncertainty. For institutional investors, the lack of clarity over future rules has complicated allocation decisions, even as some continue to explore blockchain-based settlement and tokenisation projects.

On-chain data has shown signs of stress building beneath the surface. Long-term holders, often viewed as a stabilising force, have reduced their exposure as prices slipped, while miners faced renewed pressure from lower revenues combined with high energy costs. Mining firms with weaker balance sheets have been forced to sell a greater share of their holdings to fund operations, adding incremental supply to an already fragile market.

Derivatives activity amplified the downturn. Funding rates on perpetual futures turned decisively negative, signalling that traders were increasingly positioned for further declines. As prices fell through widely watched technical levels, stop-loss orders and margin calls accelerated the slide. Analysts noted that such cascades can exaggerate moves in both directions, but also argued that the scale of liquidations reflected genuine risk aversion rather than purely mechanical trading.

Broader market psychology has also shifted. The optimism that surrounded earlier narratives around exchange-traded products, corporate adoption and payment use cases has given way to a more sober assessment of timelines and revenue models. While blockchain technology continues to attract investment in infrastructure and enterprise applications, the speculative fervour that once lifted token prices has faded.

Despite the sharp fall, some investors cautioned against drawing overly bleak conclusions. They argued that Bitcoin has endured multiple drawdowns of similar or greater magnitude over its history and has repeatedly recovered as new users, products and capital entered the ecosystem. From that perspective, the current slump may represent a painful but familiar phase of consolidation.

Others were less sanguine, pointing to structural changes in global markets. Greater correlation with equities means cryptocurrencies may no longer benefit from the diversification argument that once attracted portfolio managers. In addition, heightened oversight has reduced the scope for the kind of rapid, leverage-fuelled expansions seen in earlier cycles.