Bitcoin crashes to $60,000, losing half of its value in just four months – will it trigger a ‘death spiral’ for crypto?

Bitcoin is rebounding after a dramatic crash that saw it fall as low as $60,000 amid a crypto market rout.

The cryptocurrency started the week at around $77,000 before plummeting to nearly $60,000, a 16-month low.

While it has rebounded to trade at around $65,000 this morning, bitcoin has lost nearly half of its value in over four months, after it reached a record high of $122,000 in October.

It now sits at its weakest level since October 2024, a month before Donald Trump won the election, in which he expressed support for the crypto market.

The sell-off has gathered pace this week as key names, including Michael Burry, joined the chorus warning against cryptocurrencies.

Burry, who predicted the 2008 financial crisis, said bitcoin is now ‘exposed as a completely speculative asset’ and the falling price could trigger a ‘death spiral’.

Bitcoin is touted as a hedge against volatility, but it has declined in tandem with other assets, including precious metals and tech stocks this week.

Richard Farr, chief market strategist at Pivotus Partners, set a price of target of zero for bitcoin and said the cryptocurrency had failed to function as a hedge and operates as ‘a speculative instrument correlated to the Nasdaq.’

Bitcoin is down 16 per cent over the week, taking its losses for the year to 26 per cent.

Other cryptocurrencies have been caught in the sell-off too. Ether, which is trading up 3 per cent this morning, has shed 17 per cent over the week, with losses of nearly 37 per cent since the start of the year.

What’s behind the selloff?

The crypto rout has occurred at the same time as a heavy sell-off in gold and silver and in tech stocks, as investor concerns over AI deepen.

It suggests cryptocurrencies, which were once promoted as a place to park money during market turbulence, no longer serve their original purpose.

‘Traditional markets remain an important swing factor,’ said Joel Kruger, markets strategist at Lmax Group. 

‘Yen weakness tied to Japan’s election outlook, easing eurozone inflation, and ongoing uncertainty around U.S. growth and labor momentum continue to shape global risk appetite.

‘The dollar has stayed modestly supported, yields remain firm, and geopolitical headlines — from Middle East tensions to shifting fiscal expectations — are keeping investors selective, all of which has limited crypto’s ability to participate in broader risk rallies.’

The sell-off was also triggered by Trump’s nomination of Kevin Warsh as the new chair of the Federal Reserve, said Deutsche Bank. 

His ‘hawkish’ approach could keep interest rates higher, which would have a negative effect on the crypto market.

There are other crypto-specific dynamics adding to investor nerves, too.

‘Expectations had become stretched around the idea that bitcoin would not revisit sub-$100,000 levels, and when Q4 failed to deliver the upside momentum many had priced in, positioning quickly unwound,’ said Kruger.

While this week has seen the sell-off pick up pace, there has been a steady decline in bitcoin’s price since October 2025.

‘The steady selling in our view signals that traditional investors are losing interest and overall pessimism about crypto is growing,’ Deutsche Bank said in a note to clients.

It added that bitcoin is unlikely to return to its previous highs.

Kruger predicts while there may be more near-term volatility in the cryptocurrency, ‘the market is moving closer to a meaningful base rather than further away from one.’

Chris Beauchamp, chief market strategist at IG said: ‘Beleaguered investors will be asking if that was it, after a plunge that has seen the price of bitcoin halve since the October highs. 

‘Despite all the commentary around bitcoin’s apparent demise, this sell-off still pales in comparison with previous crypto winters. 

‘While the arguments for why it is past its peak are strong, history suggests it has plentiful powers of recuperation.’