What’s going on with bitcoin?
By Frank Adeche
Updated Feb. 5, 2026
Bitcoin is behaving strangely.
The world’s most well-known cryptocurrency has now shed about half its value since peaking in October, slipping below $63,000 on Thursday for the first time in 16 months.
A drop like this, on its own, isn’t shocking. Crypto is famously volatile, and bitcoin has endured far steeper crashes in the past.
What’s unusual is the timing. Bitcoin’s four-month slide comes at a moment when, at least on paper, conditions should be working in its favor.
For years, crypto enthusiasts have pitched bitcoin as “digital gold” — a modern safe haven where investors can park their money when uncertainty rises.
If that idea held true, this would be the perfect moment for bitcoin to shine.
Global tensions have escalated sharply. President Donald Trump has threatened military action against Iran following the U.S. removal of Venezuela’s leader. He has also clashed with allies in Europe and Canada over Greenland and floated higher tariffs on South Korea.
At the same time, rapid advances in artificial intelligence are unsettling markets. Anthropic’s Claude is now capable of handling tasks traditionally done by law firms, sending software stocks tumbling.
Market anxiety is showing up everywhere. CNN’s Fear and Greed Index has sunk firmly into “fear” territory, and the VIX volatility index recently spiked to its highest level since November, when confusing economic data and Nvidia earnings briefly rattled investors.
That fear has fueled a historic surge in gold prices, which recently blasted past $5,500 per troy ounce. Gold remains the ultimate safe haven: scarce, tangible, and capable of holding value — even, in theory, tucked away under a mattress.
Bitcoin, however, hasn’t followed suit. It’s down 20% so far this year despite the turmoil. Michael Burry, the investor made famous by The Big Short, recently suggested on his Substack that the recent wild swings in gold and silver may be driven by bitcoin investors selling precious metals to cover losses from crypto’s decline.
The slump has also erased bitcoin’s entire “Trump bump.” After Trump’s victory in November 2024, crypto markets surged as investors welcomed his embrace of digital assets and his pledge to roll back regulations he argued were stifling the industry.
So what’s driving this new crypto winter? Above all, growing skepticism that bitcoin truly functions as “digital gold.”
Instead of acting as a refuge, bitcoin has been swept up in the broader “risk-off” mood gripping markets. Fear hasn’t drawn buyers in — it’s pushed them out. The widening gap between gold, up 24% since October, and bitcoin, down roughly 50%, has only reinforced that perception.
Policy signals haven’t helped. Treasury Secretary Scott Bessent testified Wednesday before the House Financial Services Committee that the Treasury lacks authority to stabilize crypto markets.
Meanwhile, bitcoin ETFs haven’t attracted the flood of investment that crypto advocates had hoped for. Institutional participation has slowed, trading volumes have thinned, and that has amplified sharp, emotional moves by everyday traders.
Still, longtime bitcoin investors may see reason for cautious optimism. This downturn isn’t unprecedented.
In 2014, crypto prices collapsed after the Mt. Gox exchange was hacked. A far larger crash followed in 2018, when bitcoin plunged 74% amid fears that the boom in initial coin offerings had gone too far. The market then suffered back-to-back crashes in 2021 and 2022, as regulatory pressure and the FTX scandal crushed confidence.
Each time, bitcoin eventually rebounded — fully recovering within about a year and a half.