The crypto winter is not over! The crypto market resumes its decline, following tech stock sentiment

Cryptocurrency declines on Thursday. The day before, the crypto market unexpectedly rebounded, leading some investors to be optimistic that after more than four months of decline, the crypto market may be bottoming out.

Bitcoin temporarily fell 3.5% during New York trading hours to $66,511. On Wednesday, Bitcoin rose to $70,000 for the first time since February 16, driven by a broad rebound in risk assets.

Bitcoin ETFs listed in the U.S. saw over $500 million in net inflows on Wednesday, but have still experienced a net outflow of about $1.7 billion this year.

Cryptocurrencies continue to follow market sentiment in tech stocks. Nvidia’s stock price fell due to market doubts about the sustainability of large-scale AI spending, despite reporting strong earnings, dropping over 5% on Thursday. Meanwhile, traders are retreating from sectors believed to be vulnerable to AI disruptions.

Kaiko, a crypto data company, analyst Adam McCarthy said, “I’m not very optimistic right now. During bear markets and periods of low liquidity, such rebounds are expected. As we see, this rally lacks sufficient support, so a pullback is not surprising.”

Matt Hougan, Chief Investment Officer at Bitwise Asset Management, stated, “The end of the crypto winter is not ending with excitement but with indifference. A single-day surge is exciting, but no one expects Bitcoin to jump straight back to $100,000. Bitcoin is in a bottoming process. This will take some time, and it will be quite chaotic, possibly with even lower lows.”

Most crypto bulls in the market, like Tom Lee, believe markets tend to bottom out amid “bad news,” and Citriini Research’s AI doomsday articles suggest a bottom is forming. They believe the decline of the Mag 7 has “already completed about 95%,” the sell-off in the software sector is “about 99% done,” and the crypto pullback is in its “final weeks.”

Earlier this month, Bitcoin erased all gains since President Trump’s re-election in November 2024. The market had high hopes for more crypto-friendly policies in Trump’s second term, which pushed Bitcoin to a record high of over $126,000 last October. But a large-scale sell-off followed, putting digital assets under continued pressure since then.

American Bitcoin Corp., a mining company supported by the Trump family, which had gone public on Nasdaq during the crypto boom, is now caught in the industry’s worst downturn since 2022. The company reported a $59 million loss in Q4, with its market value nearly evaporated by 90%.

An analysis article on Wallstreetcn pointed out that in this crypto winter, the underlying infrastructure has not collapsed. Despite Bitcoin being sold off, the infrastructure remains intact: exchanges are operating normally, custodians are solvent, institutional buyers are holding firm, Bitcoin ETF assets are held steadily, and free trading supply has decreased. Bernstein analysts say this is merely a “crisis of confidence.”

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