More than $1 trillion in value gone in 8 months. What’s going on with bitcoin?

Bitcoin has lost more than $1.2 trillion in market cap since reaching an all-time high of $126,000 last fall, now trading just above $60,000. The decline has erased all gains since President Donald Trump’s 2024 reelection, with the cryptocurrency down nearly 30% this year and 6% since his term began. Meanwhile, the S&P 500 has risen nearly 10% annually and 30% since Trump took office, while gold has climbed 60% over the same period. The downturn began after a flash crash on October 10, 2025, which triggered billions in liquidations, and has persisted despite brief rallies tied to geopolitical tensions like the Iran war. Bitcoin briefly surged in late February amid conflict fears but failed to sustain gains, unlike stocks and gold. BlackRock’s bitcoin ETF experienced daily outflows from mid-May to early June, reflecting investor pullback. Analysts attribute the slump to shifting investor interest, with artificial intelligence and AI-related IPOs like SpaceX drawing attention away from crypto. Jonathan Bier, CEO of Farside Investors, noted that speculative money may be moving from bitcoin to AI. Additionally, uncertainty over Federal Reserve interest rates and inflation has weighed on crypto markets, as higher rates typically reduce liquidity and pressure risk assets. The broader crypto industry has suffered, with Coinbase shares down about 30% this year. Market volatility has also led to forced liquidations of leveraged positions, with nearly $2.5 billion in long bitcoin bets wiped out in early June. Gerry O’Shea of Hashdex said crypto struggles in restrictive monetary environments, while Ryan Rasmussen of Bitwise noted liquidations deepen downturns. Mark Cuban, who sold most of his bitcoin holdings, called the cryptocurrency’s underperformance ‘disappointing,’ stating it failed as an expected hedge against uncertainty.