Bitcoin Faces Significant Monthly Decline Amid Economic Concerns
Bitcoin (BTC) is poised to experience its most challenging month in three years, having plummeted by 22%. This downturn comes in the wake of President Donald Trump’s tariffs imposed on several major U.S. trading partners, igniting fears of accelerated inflation, diminishing prospects for interest rate cuts, and a reduced appetite for riskier investments.
The last time the leading cryptocurrency saw a decline of this magnitude was in June 2022, when it suffered a drop exceeding one-third of its value. In just this week alone, BTC has seen a nearly 18% decrease, marking the steepest decline since the week ending November 13 of the same year.
This sharp decline has left many investors, who entered the market this year, facing substantial unrealized losses. The average purchase price for Bitcoin since the beginning of January stands at $97,880, and with BTC trading below $80,000 earlier on Friday, those who bought in have found themselves approximately 18% worse off.
Historically, such fluctuations are not entirely unprecedented. It is common for investors to encounter unrealized losses at the year’s outset, particularly when Bitcoin’s price dips below the cost basis of their holdings before experiencing a rebound later on. On-chain analytics reveal that realized losses have surged as prices have continued to fall. In the past three days alone, around $1 billion in realized losses has been recorded daily, the highest level since August’s yen carry trade unwind, which saw Bitcoin drop to $49,000.
Furthermore, the overall cryptocurrency market has been significantly impacted, with an astounding $1.1 trillion wiped off the market capitalization, bringing the total down to $2.59 trillion, as per TradingView metrics. As the market grapples with these challenges, investors remain cautious and vigilant, hoping for a potential recovery in the months ahead.
