Bitcoin Plunges 50% Despite Crypto Policy Push and Institutional Adoption

Bitcoin (BTC-USD) has lost roughly half its value since reaching a record above $126,000 in October, falling to levels last seen in September 2024 despite improving expectations around cryptocurrency regulation and the absence of the major scandals or forced liquidations that disrupted earlier market cycles. Previous crypto winters produced declines of as much as 80%, but the latest selloff may be more troubling for long-term supporters because it appears to have been driven by a steady decline in investor interest rather than one major market event. Bitcoin also fell below $60,000 for the first time in two years after losing more than $10,000 during the week when Strategy Inc., a software company that has become the largest corporate Bitcoin buyer, disclosed the sale of 32 Bitcoin worth $2.5 million.Bitcoin's growing integration into traditional finance may have changed the way the cryptocurrency trades. Its recovery from the 2022 crypto winter was partly supported by financial institutions investing through Bitcoin-backed exchange-traded funds, meaning portfolio managers now play a more significant role in determining demand. The cryptocurrency has also struggled to perform like the digital gold promoted by supporters during the inflationary price shock linked to the Iran war, while higher market interest rates reduced the appeal of an asset that pays no income. Instead, Bitcoin has behaved more like other high-risk investments, competing for capital with perpetual futures, prediction-market platforms Polymarket and Kalshi, and large technology companies benefiting from the artificial intelligence investment boom.Strategy , which Michael Saylor transformed from a software company into a Bitcoin proxy in 2020, has accumulated more than 4% of the roughly 20 million Bitcoin currently in circulation. The company had previously promoted a strategy of continuously expanding its holdings, making its June sale the first since December 2022 and a potentially important shift for market sentiment. Investors have also questioned whether Strategy can sustainably pay generous dividends on its preferred shares when Bitcoin itself generates no yield, while the company's valuation has moved closer to the value of its Bitcoin holdings. Regulatory uncertainty may add further pressure because negotiations over the Digital Asset Market Clarity Act remain divided by disagreements involving regulatory jurisdiction, interest-bearing stablecoins, President Donald Trump's crypto-related income, and Section 604 protections that law-enforcement groups warned could provide legal cover for criminal transactions.