Bitcoin Sinks as Bessent Dismisses Bailout

Bitcoin sank to below $70,000 for the first time since October of 2024, marking a 25% plunge since the start of the year, pressured by a selloff in speculative positions across a wide range of asset classes. The aggressive decline was marked by a deterioration in the narrative around cryptocurrencies, breaking against the view of a hedge against inflation and geopolitical stress, and tracking the drop in gold. Additionally, the higher share of Bitcoin in institutional portfolios made it more vulnerable to derisking, which recently dominated trades following higher volatility and margin requirements in precious and base metal derivatives. Other portions of the market also tie the decline in cryptocurrency holdings by retail traders on the broader range of substitutes for speculative trading, including leveraged ETFs with exposure to AI companies, zero-day options for equities, and the rise of betting markets.

Bitcoin dropped below $73,000 in early February, hovering at its weakest levels since November 2024 after US Treasury Secretary Scott Bessent said the US government would not bail out the cryptocurrency. When asked in a House Financial Services Committee whether the US Treasury had the authority to buy bitcoin or other digital assets, Bessent answered that he has no such authority. The world’s largest cryptocurrency is now down more than 40% from its October peak, with investor Michael Burry warning the selloff could deepen and inflict lasting damage on companies that amassed large holdings over the past year. He argued that bitcoin has been exposed as a purely speculative asset and has failed to serve as a debasement hedge comparable to gold and other precious metals.

Bitcoin dropped to as low as $72,800 in early February, hitting its lowest levels since November 2024 as forced liquidations of leveraged positions intensified and fund outflows accelerated. Industry data showed that nearly 170k leveraged traders were washed out during the selloff, with more than $730 million liquidated over the past 24 hours. Bitwise CIO Matt Hougan said bitcoin has been in a multi-month bear market, arguing that strong institutional adoption and greater regulatory clarity have left investors complacent. Meanwhile, global crypto funds recorded another $1.7 billion in net outflows last week, led by US-listed products, while assets under management have fallen by $73 billion since peaking in October 2025. In other developments, investor Michael Burry warned that bitcoin’s roughly 40% plunge could deepen and inflict lasting damage on companies that have accumulated large holdings over the past year.