Bitcoin's year-to-date gains have been completely wiped out, plunging it into a technical bear market.

Original title: "Bitcoin's 30% Gain This Year Wiped Out, Entering a Bear Market"

Original author: Long Yue

Original source: Wall Street News

Bitcoin is facing a severe test as enthusiasm for the US government's pro-crypto stance fades and market risk aversion intensifies, and the bear market across the crypto market appears to be deepening.

Bitcoin, the cryptocurrency with the highest market capitalization, fell below $93,714 on Sunday. This price level is below its closing price at the end of 2024, meaning that the more than 30% annual gain earlier this year has been "completely wiped out."

This plunge occurred just over a month after the asset hit an all-time high. On October 6, Bitcoin's price surged to a record high of $126,251, but four days later, global markets were thrown into turmoil by unexpected comments from US President Trump regarding tariffs, and Bitcoin subsequently began its downward spiral.

The decline in institutional participation is one of the core drivers of this round of decline. According to Bloomberg data, Bitcoin exchange-traded funds (ETFs) have attracted over $25 billion in inflows this year, pushing their total assets under management to approximately $169 billion. These stable inflows had previously helped reshape Bitcoin as a portfolio diversification tool.

However, this narrative of "hedge assets" is "becoming fragile again" as large buyers, including ETF allocators and corporate finance departments, quietly withdraw. A prime example is Michael Saylor's Strategy Inc., whose stock price is now close to the value of its Bitcoin holdings, indicating that investors are no longer willing to pay a premium for their highly leveraged Bitcoin strategies.

Macroeconomic headwinds and deleveraging

The shift in the macroeconomic environment is another key factor. Matthew Hougan, chief investment officer at Bitwise Asset Management, points out that "the overall market is in risk aversion mode," and "cryptocurrencies are the canaries in the coal mine, reacting first."

The recent pullback in tech stocks has also led to a decline in overall market risk appetite. Jake Kennis, senior research analyst at Nansen, stated that the sell-off was a confluence of "profit-taking by long-term holders, institutional outflows, macroeconomic uncertainty, and the liquidation of leveraged long positions." He added that after a prolonged period of consolidation, the market has temporarily chosen a downward direction.

Altcoins fell even more sharply.

The prevailing pessimism in the market is exacerbating the sell-off. Matthew Hougan stated, "Cryptocurrency retail sentiment is quite negative," with many choosing to exit early to avoid another 50% pullback. This pessimism is even more pronounced in the more volatile altcoin market.

According to reports, the MarketVector index, which tracks the bottom 50 of the top 100 digital assets, has fallen by about 60% this year. Chris Newhouse, research director at Ergonia, a company focused on decentralized finance, also observed that the market is generally skeptical of capital deployment and lacks natural bullish catalysts.