Since January 20, 2025, Bitcoin has fallen from $106,394 to $83,888, marking a 21% drop in less than two months. This decline aligns with an overall slump in the crypto market, which saw its total market cap shrink from $3.7 trillion to $2.5 trillion, wiping out $1.2 trillion in value.
According to TradingView data, Bitcoin’s market cap, which stood at approximately $2.11 trillion in January, has been hit hard. The downturn is mirrored in the broader crypto space, with Bitcoin ETFs losing $20 billion in assets under management (AUM) and DeFi’s total value locked (TVL) dropping by $35.5 billion, per Coinglass and DefiLlama data.
Gold Gains Ground Amid Market Uncertainty
As Bitcoin struggles, gold has seen a steady rise. Since January 20, 2025, gold has increased from $2,708 to $2,916 per ounce, a 7.7% gain. This growth underscores gold’s traditional role as a safe-haven asset during economic uncertainty.
Why Is Bitcoin Struggling?
Stock Market Correlation
Bitcoin’s correlation with the Nasdaq 100 and S&P 500 stood at 88% throughout 2024, highlighting its status as a risk asset rather than a hedge. However, that correlation has now dropped to 40%, suggesting increased volatility and shifting investor sentiment.
Trade War Fears and Liquidity Concerns
Economic instability has also played a role. A Bank of America survey reported by Pensions & Investments on March 4, 2025, indicates that 42% of investors now see trade wars as the biggest risk, up from 30% in January. This growing concern has led to a flight to the U.S. dollar, further pressuring Bitcoin’s price.
What’s Next for Bitcoin?
Despite its decline, Bitcoin remains a focal point in financial discussions. Some analysts argue that its long-term potential remains strong, while others believe its hedge narrative is weakening. Meanwhile, gold continues to prove its resilience in uncertain times.
With Bitcoin ETFs experiencing outflows, DeFi liquidity shrinking, and market sentiment shifting toward gold, the crypto market may face more volatility ahead. The coming months will reveal whether Bitcoin can reclaim its position as a financial hedge or if gold will continue to shine as the preferred safe-haven asset.
