“It’s absolutely crazy.”
While the comment came from a social media post, this painful knee-jerk reaction is likely to have a full impact on anyone with even a passing interest in cryptocurrencies, as Bitcoin just plummeted to near $77,000 on Saturday and has remained at that level ever since.
The prices of the largest digital assets are not just falling; It fell below the $80,000 floor and reached its highest level since the “tariff frenzy” in April 2025.
By Saturday afternoon, amid thin weekend liquidity, Bitcoin had lost a staggering $800 billion in market capitalization since its October peak of $126,000, with about $2.5 billion in leveraged long positions liquidated within 24 hours.
The plunge has even pushed Bitcoin out of its long-standing ranking of the world’s top 10 assets, now trailing institutional heavyweights such as Elon Musk’s Tesla and Saudi Aramco.
To say the sell-off was painful would be putting it mildly, as social media was in full panic mode and everywhere you looked, there was blood on the streets. This isn’t limited to Bitcoin; all asset types, from tech stocks to precious metals, have had a painful week.
If you’re wondering why the “digital gold” narrative has suddenly gone silent, here’s a detailed analysis of the three-headed monster currently driving the market into a state of “extreme fear.”
1. Geopolitics disrupts “security” trade
The immediate spark on Saturday was a real blast. Reports of a possible sharp escalation in the military conflict between the United States and Iran sent risk appetite into a deep freeze. Rather than viewing Bitcoin as a safe haven, traders are repeating a familiar playbook. They see it as a source of liquidity.
In times of war, investors often “flee to safety” and move capital into U.S. dollars. Since Bitcoin is a 24/7 market, it often serves as the “first responder” to global panics. On Saturday, it acted as the world’s ATM, selling off to cover losses and find safety during a weekend of low liquidity.
Not to mention that liquidity has never recovered since the October 10 crash (which many pointed the finger at Binance), making market dynamics even more tenuous heading into this weekend.
2. Gold and silver face a “hard currency” reset
Bitcoin isn’t the only casualty this week. The broader trade in “stores of value” is under siege. On Friday, gold plunged 9% in one session to just under $4,900, while silver tumbled a historic 26% to $85.30.
Bizarrely, the traditional “safe havens” of gold and silver are being sold off alongside cryptocurrencies. Analysts say the sharp rise in the U.S. dollar due to Kevin Warsh’s nomination as Fed chairman has made these U.S. dollar-denominated metals too expensive for international buyers, leading to a massive “de-risking” of all hard assets.
In early trading on Sunday, both gold and silver rebounded from a difficult Friday, rising 1% and 3% respectively. Currently, gold is trading near $4,730 and silver is trading around $81.
3. “Liquidation Trap”
The geopolitical shock hit markets already “injured” by changes in the political landscape in Washington. As prices fell, a massive mechanical collapse of the market was triggered.
When prices began to collapse on Saturday, more than $850 million in bullish bets (long positions) were wiped out in a matter of hours, eventually totaling nearly $2.5 billion, according to Coinglass data. These liquidations occur when traders borrow money betting that prices will rise; once the price reaches a certain “trap door,” the exchange automatically sells its holdings to pay off the debt. This creates a “domino effect” – forced selling causing prices to fall, triggering more liquidations. On Saturday, the accounts of nearly 200,000 traders were completely liquidated.
4. Michael Saylor’s Bad Day
To make matters worse, the price of Bitcoin briefly plummeted below Michael Saylor Strategy’s (MSTR) average entry point of approximately $76,037, leaving his massive Bitcoin stack “in trouble.” Panic set in that he might be forced to sell his collection, making the sell-off even more deadly.
However, CoinDesk refuted this theory, explaining that Thaler would not be forced to sell his Bitcoin reserves because none of his Bitcoins were pledged as collateral. But it does mean that it will hinder his ability to raise cheap funds to buy more Bitcoin on the open market.
Although Thaler later said he would “buy the dip,” the damage had been done. The market realized that if large companies like Strategy were unable to raise more funds to buy Bitcoin on the open market, an already fragile market would be left without buyers and vulnerable to forced liquidations and profit-taking.
As a result, market sentiment has shifted from “moonshot” optimism to defensive hedging as investors rush to buy price insurance in the options market to prevent further price declines towards $75,000.
5. Wall Street is nervous: U.S. futures turn red
This crisis has spread to the traditional financial sector.
Although the New York Stock Exchange was closed for the weekend, U.S. stock index futures opened lower on Sunday night (US East Coast time) across the board; the Nasdaq fell 1% and the S&P 500 fell 0.6%.
Get ready for a potentially chaotic Monday!
6. Whales and the World: A Tale of Two Investors
Perhaps the most telling thing about this crash is not the price, but the price. This is wallet data.
Glassnode data shows small investors are running. “Minnows” (holders holding less than 10 BTC) have been selling Bitcoin for over a month. They are spooked by the 35% drop from the all-time high of $126,000 and are capitulating.
Meanwhile, “whales” (people holding more than 1,000 BTC) have been quietly adding to their stacks. The group is now back to levels not seen since late 2024, effectively absorbing the coins that panicked retail traders are dumping. Although their purchases were not large enough to push prices higher.
7. Big picture: human beings’ inevitable greed
Now let’s zoom out and compare this weekend’s sell-off and current market dynamics to what came before.
To be clear, this cycle is not all doom and gloom. Companies like BlackRock and JPMorgan Chase in the traditional finance space have been going all-in on cryptocurrencies through exchange-traded funds and stablecoins. Regulatory frameworks are being created around the world to make cryptocurrencies more accessible and usable to the masses, and many legitimate crypto companies are becoming publicly traded and becoming part of many fund managers’ “must-have” stock allocations. In previous cycles, these would have been unimaginable.
But the similarities between the last four months and the beginning of crypto winter in late 2021/early 2022 may be growing, and while the names and methods may have changed, the nature of human behavior and market boom-busts has not.
Companies like Three Arrows Capital, Do Kwon and TerraUSD, BlockFi and Sam Bankman-Fried may be overtaken by the Trump family’s alleged naked windfalls, Michael Saylor’s massive purchases promising 11% risk-free rates in a world of 3% risk-free rates, and high-profile cryptocurrency Twitter personalities joining forces with investment bankers to make quick money at digital asset finance companies..
As in 2021, these new developments may have created a speculative bubble that is likely to burst in 2026. The only question now is how long and deep the downturn will last.
While no one has fond memories of the crypto winter of 2022 — when Bitcoin prices dropped 80% — it was relatively short, about a year from peak to trough. Since then, the price of Bitcoin has rapidly doubled, rising throughout 2023 and eventually setting a new record in early 2024.
In theory, if it falls another 80% from its October 2025 high of $126,000, Bitcoin would be around $25,000. That’s a scary number to even think about, but it may be necessary to undo the worst mistakes of past bull markets and prepare for another sustained move higher.
The 2022 bear market ended shortly after FTX collapsed and CEO Sam Bankman-Fried was arrested. Whether the bracelet is necessary for bulls this cycle remains to be seen.
Warren Buffett said, “Only when the tide goes out do you discover who has been swimming naked.” The tide may not have completely gone out yet, but it certainly feels like it’s moving in that direction.
Read more: How instant gratification is sucking the air out of the Bitcoin market
