Market value drops by $600 billion, can Bitcoin believers still hold on to their faith?

Bitcoin has long been fueled by three engines simultaneously: Wall Street capital, political endorsements, and institutional funds. However, recently, Bitcoin unexpectedly went out of steam. Noticed in October, after breaking above $126,000, Bitcoin experienced a significant drop, erasing all of its gains from 2025, only stabilizing in the early hours of Monday in Asia. In a year where Bitcoin's legitimacy was expected to be consolidated, its price has significantly dropped from its historical highs. Wall Street has entered the scene with exchange-traded funds bringing cryptocurrencies into mainstream investment portfolios, and the Trump administration has fully embraced cryptocurrencies. However, the market has still retreated quickly and with force, but without clear reasons. Data shows that Bitcoin's total market value has plummeted by about $600 billion from its peak in October. While volatility is common in the cryptocurrency market, the speed at which faith is dissipating and the lack of credible explanations is notable this time around. Anxiety is spreading in trading halls and on social media. Traders are repeatedly looking at old charts, revisiting familiar theories, and eagerly searching for buyers. With no traditional Wall Street template for Bitcoin behavior no stable correlations, no validated risk frameworks some are resorting back to the most familiar pattern: the four-year halving cycle. The halving event refers to the design where Bitcoin's supply growth approximately halves every four years. Historically, this stimulates speculative booms followed by painful crashes, with miners (those who operate powerful computers supporting the network) often selling their holdings amidst deteriorating prices. This boom-and-bust cycle often has a lag. The current halving occurred in April 2024, with prices peaking in October this year. This largely follows the old pattern. However, with deep-pocketed buyers shaping the market, whether this pattern still applies is now not as clear. Chief Investment Officer at Bitwise Asset Management Matthew Hougan said, "Sentiment in the retail cryptocurrency market is very bad, and there may still be some downside risks in the market." He believes prices will rise next year, but adds, "The market is worried that the four-year cycle may repeat, and they do not want to experience another 50% pullback. Investors are hedging this risk by exiting the market." The partial losses reflect a hangover effect and market fatigue. Retail funds were hit when they chased cryptocurrency-related stocks at their highs. In early October, trade tensions unexpectedly escalated, coinciding with high leverage ratios, triggering forced liquidation. The result was elevated market expectations, lack of faith, and once sentiments turned, the market proved too fragile to bear the selling pressure. All of this is happening at a time when the narrative supporting cryptocurrencies seems strongest. ETFs attracted billions of dollars mid-year, reshaping Bitcoin as a macro hedge tool. President Trump's pro-cryptocurrency policies promised more upside, but the inflow of funds has stagnated. Some long-term holders are cashing out. Representative companies like Strategy Inc. are seeing their stock prices close to the value of their Bitcoin holdings suggesting that faith no longer brings a premium. Analyst at crypto data company Nansen, Jack Kennis, noted, "At this stage, Bitcoin trading is more like embedding institutional investment portfolios with a macro asset, responding to liquidity, policy, and dollar dynamics, rather than reacting to mechanical and predictable supply shocks." Despite much talk about institutionalization, market trading still relies on feelings. And current feelings are grim. Risk appetite has reversed. Altcoins have suffered significant losses this year. Trump's boost has not shielded cryptocurrencies from macro headwinds nor from competition from new speculative favorites like artificial intelligence, stablecoins, and prediction markets. Senior commodities strategist at BI, Mike McGlone, said, "Bitcoin is an 'iceberg tip' of risky assets, and it's melting right now, while gold and stocks are close to historical highs. I expect Bitcoin and most cryptocurrencies to continue falling." Market fundamentals remain intact, with Bitcoin's gains still impressive since Trump's election victory. However, the recent downturn is disappointing for assets expected to reach $200,000 by year-end. If Bitcoin cannot break out despite having policy support, increasing mainstream adoption, and a well-developed financial infrastructure when will it? ETF analyst at BI, Eric Barguenas, suggested that it might be traders' nervousness about historical repeating events that "might make the four-year cycle happen." He added, on one hand, "The typical rhythm may be slightly disrupted, or permanently disrupted." Derek Lin, research director at crypto market maker Caladan, stated that the bull markets in Bitcoin in 2017 and 2021 result not only from previous halving events but also from "a more powerful, more fundamental driving force: global liquidity." He added that with the end of the US government shutdown, this liquidity may return.