At the beginning of 2026, the cryptocurrency market came under pressure: the price of Bitcoin returned to the levels of April last year and fell below the $90,000 mark. From its peak reached in the autumn of 2025, the asset has lost about 30%.
Political instability as a pressure factor
One of the key triggers behind Bitcoin’s decline has been political turbulence in the United States. Decisions made by U.S. President Donald Trump have already had a noticeable impact on global markets. In the autumn of 2025, statements about the introduction of new trade tariffs against China triggered a wave of sell-offs that also affected the crypto market.
At the beginning of 2026, rising tensions between the U.S. and Europe further increased investor anxiety. According to Wincent CEO Paul Howard, European stock exchanges declined by about 2%, while cryptocurrencies reacted even more sharply.
Additional pressure came from a correction in the U.S. stock market. The S&P 500* and Nasdaq Composite* indices lost more than 2% during the third week of January. Historically, Bitcoin often moves in sync with risk assets, so worsening sentiment in the stock market intensified the cryptocurrency’s decline.
* S&P 500 (Standard & Poor’s 500) — one of the key U.S. stock indices, comprising 500 of the largest publicly traded companies by market capitalization. The index is calculated using market value (capitalization-weighted), meaning larger corporations have greater influence on it. The S&P 500 is considered an indicator of the overall condition of the U.S. economy and investor sentiment. Its performance reflects confidence in the corporate sector, growth prospects, and macroeconomic expectations.
* Nasdaq Composite — a stock index that includes more than 3,000 companies listed on the Nasdaq exchange. Unlike the S&P 500, it has a strong technological focus: a significant share of the index consists of IT companies, software developers, semiconductor manufacturers, and internet platforms. Since cryptocurrencies are often viewed as high-tech, high-risk assets, Nasdaq’s performance tends to correlate with Bitcoin’s movements.
Galaxy Digital founder Mike Novogratz also pointed to a large-scale sell-off of long-term bonds* as an unfavorable signal. Sales of securities with maturities exceeding 10 years often reflect rising uncertainty and capital reallocation. In such conditions, investors reduce their exposure to risk assets, including cryptocurrencies.
* Long-term bonds — debt securities with a maturity typically of 10 years or more. Governments or corporations issue them to raise capital. Key characteristics:
fixed or floating interest rate (coupon);
high sensitivity to changes in interest rates;
dependence on inflation expectations.
Price correction after market overheating
Some experts believe the current Bitcoin downturn is a natural cooling phase following the 2025 rally. Active price growth was accompanied by capital inflows and heightened speculative activity, leading to market “overheating.”
Against this backdrop, investors began taking profits. Moreover, this applies not only to short-term traders: long-term BTC holders also increased selling during local rebounds in December 2025 and January 2026. This dynamic added further pressure to the price.
Weakness across the entire crypto market
The decline has affected not only Bitcoin. The Fear & Greed Index* dropped to 5 points, which corresponds to the zone of extreme fear and indicates seller dominance.
* Fear & Greed Index — an aggregated indicator of sentiment among crypto market participants. It is calculated based on several factors: market volatility, trading volume, social media dynamics, market momentum, and Bitcoin dominance. The scale ranges from 0 to 100:
0–24 — extreme fear;
25–49 — fear;
50 — neutral zone;
51–74 — greed;
75–100 — extreme greed.
Low values of the Fear & Greed Index indicate panic selling, while high values may signal market overheating.
According to the аналитical platform Glassnode, over the past month, investors realized approximately 68,500 BTC on exchanges.
Negative dynamics are also observed in the exchange-traded fund segment. According to CoinMarketCap’s Bitcoin ETF Tracker, net outflows from Bitcoin ETFs* exceeded $1 billion over the week — the highest level since November 2025. Massive capital withdrawals from crypto funds increase pressure on the market.
* Bitcoin ETF (Exchange-Traded Fund) — an exchange-traded investment fund whose shares are traded on a traditional stock exchange and reflect Bitcoin’s price performance. This instrument allows investors to gain exposure to BTC through familiar stock market infrastructure — a brokerage account, regulated venue, and standard settlement procedures.
Key advantages of Bitcoin ETFs:
no need to independently store private keys;
reduced technical risks (wallet hacks, loss of access);
operation within regulated markets;
ability to include the instrument in institutional portfolios (pension funds, asset management companies).
At the same time, the investor does not gain direct control over Bitcoin: they own fund securities rather than digital assets.
It is also worth noting the large-scale liquidation of long positions. On January 20, the volume of closed longs* approached $1 billion in a single day — the largest figure since December 2025. The forced closure of more than 180,000 positions triggered a sell-off cascade, further accelerating the price decline.
* Long (long position) — a trading strategy in which an investor purchases an asset expecting its value to rise further. The approach involves buying at the current market price and selling at a higher price, thereby realizing a profit on the difference between the quotations.
The role of Federal Reserve policy
Interestingly, Bitcoin’s correction is occurring despite the easing of monetary policy by the U.S. Federal Reserve (Fed). During 2025, the regulator lowered the interest rate three times — from the 4–4.25% range to 3.5–3.75%. It is expected that the rate will fall to 3–3.25% in the first quarter of 2026.
Traditionally, rate cuts increase the attractiveness of risk assets, as the yields of conservative instruments decline. However, investors fear that if inflation slows, the regulator may pause policy easing or return to tightening. Such expectations reduce risk appetite and support cautious sentiment.
Thus, the current decline in Bitcoin is driven by a combination of political risks, post-rally correction, capital outflows from funds, and overall investor caution. Further dynamics will depend on macroeconomic signals, regulatory policy, and the market’s willingness to take on risk again.