After hitting an all-time high in October, Bitcoin has sharply reversed course, erasing all its 2025 gains in recent days. Yesterday, Bitcoin briefly plunged below $93,714, dipping below its December 2024 closing price and wiping out its year-to-date rally of over 30%. Latest data shows Bitcoin’s total market capitalization has shed roughly $600 billion since its October peak. This rapid, severe, and seemingly triggerless decline has caught the market off guard.

For an asset notorious for volatility, what stands out this time is the speed at which market confidence evaporated. The sell-off comes in a year when Bitcoin’s legitimacy appeared cemented—spot ETF approvals brought crypto into mainstream portfolios, while the Trump administration’s vocal support further buoyed sentiment. Yet reality has fallen short of expectations. Anxiety is spreading across trading desks and social media as traders revisit old charts, searching for historical parallels.

Boom then bust—is the halving cycle repeating? With no traditional financial framework to analyze Bitcoin, some market participants have defaulted to their most familiar model: the four-year "halving" cycle. Historically, this mechanism—which slashes new Bitcoin supply by half—has triggered speculative booms followed by painful busts. This cycle’s halving occurred in April 2024, with prices peaking in October 2025, roughly aligning with past patterns. But as deep-pocketed institutional investors reshape the market, it’s unclear whether this old playbook still applies.

Matthew Hougan, CIO of Bitwise Asset Management, notes, "People fear the four-year cycle might replay, and they don’t want another 50% drawdown. So they’re de-risking preemptively." This fear of history repeating may itself be fueling the sell-off.

Weak sentiment and shaken conviction The downturn also reflects market exhaustion. Retail investors suffered heavy losses chasing overhyped crypto-linked stocks, while an unexpected escalation in trade tensions in early October triggered mass liquidations amid soaring leverage. The result: a market overly reliant on hopium but lacking real conviction, unable to absorb selling pressure when sentiment flipped.

Jake Kennis, an analyst at Nansen, observes, "Bitcoin now trades more like a macro asset embedded in institutional portfolios—it’s reacting to liquidity, policy, and dollar dynamics rather than predictable supply shocks." Despite endless talk of institutionalization, trading remains largely "vibe-driven." And right now, the vibe is terrible, with risk appetite in reverse.

Institutional inflows stall, premiums vanish Spot Bitcoin ETFs absorbed billions earlier this year, rebranding Bitcoin as a macro hedge. But recent flows have stalled. Long-term holders are cashing out, while shares of industry bellwethers like Strategy Inc. now trade near the value of their Bitcoin holdings—a clear sign the market no longer pays a premium for "belief." This suggests even institutional enthusiasm has cooled. When the staunchest believers stop being rewarded, broader confidence inevitably erodes.

Macro headwinds and alt-asset competition The Trump administration’s pro-crypto stance hasn’t shielded Bitcoin from macro pressures. It also faces fierce competition from new speculative darlings like AI, stablecoins, and prediction markets. With gold and equities near record highs, Bitcoin’s underperformance stings.

Bloomberg Intelligence’s Mike McGlone calls Bitcoin "the tip of the risk-asset iceberg—and it’s melting," predicting further declines for crypto. Though market infrastructure remains intact, the crash is a gut punch for investors who expected $200K Bitcoin by year-end.

ETF analyst Eric Balchunas suggests trader anxiety about cycle repetition may be "making the four-year narrative self-fulfilling," though he adds the "typical rhythm could be disrupted—maybe permanently." Derek Lim of Caladan offers a counterview: the 2017 and 2021 bull runs weren’t driven by halvings but by "a stronger, more fundamental force: global liquidity," which may return post-U.S. government shutdown.