What to know about the crypto selloff

The price of bitcoin has plunged by nearly a third in recent weeks, wiping out much of the rapid gains made after the election of President Donald Trump.

 

Bitcoin has fallen almost $40,000 from its early-October peak of about $126,270, landing near $86,340 on Monday. Ethereum has dropped even more sharply, losing roughly 40% over the past month.

 

Overall, more than $1 trillion in cryptocurrency market value has evaporated during this period, according to industry analysts.

 

How Far Have Crypto Prices Fallen?

 

Trump’s election — and his self-branding as the “first crypto president” — set off a wave of enthusiasm that pushed bitcoin above $100,000 for the first time last December. After a spring slowdown, the coin surged again to record levels in October.

 

Even after the current slide, bitcoin still trades more than 25% higher than it did on Election Day last year.

 

Volatility, however, has long defined digital assets. In the past several years alone, bitcoin has repeatedly suffered declines of 60% or more, including major downturns in 2020–2022.

 

Experts note that these cycles reflect the absence of any traditional “fundamental value” anchor, meaning sentiment-driven surges are often followed by sharp reversals.

 

What’s Driving the Decline?

 

Analysts point to a combination of broader market weakness and shifting expectations around Federal Reserve policy.

 

A broader tech selloff over recent days — influenced by concerns about an AI-driven market bubble — has dragged down crypto. As major tech companies commit massive spending to data centers and AI model development, some investors remain skeptical about near-term profitability.

 

The tech-heavy Nasdaq has fallen around 4% since late October. Nvidia, a key chipmaker powering much of the AI boom, has lost roughly 10% over the same period.

 

Risk assets like tech stocks and cryptocurrencies often move together during downturns, in part because investors tend to treat them similarly in portfolios.

 

Another factor: fading expectations of additional interest-rate cuts. The Fed has lowered its benchmark rate at its past two meetings, and officials initially projected one more cut for December. But stubborn inflation has made policymakers more hesitant. Pullbacks in expected rate cuts often weigh on risk assets, crypto included.

 

What’s Next?

 

Crypto’s inherent volatility makes near-term predictions nearly impossible. What analysts agree on: more price swings are likely.

 

Bitcoin ETFs — which have grown substantially over the past year — have pulled digital assets further into mainstream finance, allowing investors to gain exposure without directly holding crypto. Still, this has not reduced volatility.

 

Roughly $4.7 billion flowed out of crypto-linked ETFs in November, though some funds tied to smaller coins such as Solana and XRP saw inflows.

 

Experts caution that despite greater institutional participation, crypto remains unpredictable.