Bitcoin (BTC +1.30%) can be a nerve-wracking asset to hold. Despite its reputation for being "digital gold," one of the first things investors are apt to notice about it is that its price is far more volatile than any precious metal. And that is right where many holders of Bitcoin find themselves right now.
After touching record highs just a nose above $125,000 in early October, the leading cryptocurrency has slipped to around $95,000 as I write this, its lowest level in more than six months, putting it solidly back below the six-figure mark after spending much of the past year mostly above it, and whipsawing investors yet again.
Before deciding what to do next, investors need to understand what actually changed and what did not.
Image source: Getty Images.
Why markets feel blindfolded right now
As I write this, Bitcoin is down a bit more than 20% relative to its highs, and on Nov. 14 it fell by 7% in 24 hours, which could indicate that the sell-off is accelerating rather than losing steam.
What's unusual here is that the decline is happening amid an extremely bullish backdrop, the likes of which the coin hasn't seen in its history. Bitcoin has never enjoyed this level of acceptance by financial institutions and central banks, and it's more integrated with the traditional financial system than ever.
Nonetheless, there are a few short-term factors that are making the market quite difficult. A prolonged U.S. government shutdown halted the collection and publication of key economic statistics, including the jobs report and the Consumer Price Index (CPI). In other words, investors are trying to price in macro risks while flying partly blind.
When investors cannot see clearly, they typically move toward caution, as the market (and human beings more generally) dislike uncertainty, especially when it's prolonged. As a result of that phenomenon, October ended up being Bitcoin's first negative October since 2018, with a violent midmonth flash crash on Oct. 10 that wiped out roughly $400 billion in digital asset market value and triggered a cascade of margin calls, obliterating positive sentiment across the crypto sector. As risk appetite cooled rapidly, investor psychology pivoted toward preferring staying sidelined, which is more or less where it is right now.
CRYPTO: BTC
Key Data Points
At the same time, on-chain data shows that long-term Bitcoin whales have been distributing their holdings aggressively. Roughly 13% of its circulating supply, about 2.6 million BTC has changed hands in just four months.
Nothing guarantees that the turbulence is over.
If the data blackout drags on, or if it confirms that the U.S. economy is slowing sharply once it resumes, it is likely that risk assets could fall further. Bitcoin has already dropped a lot from its high; another 20% (or even 40%) is not out of the question if a true risk-off episode develops.
The point here is that the recent move down is not random noise, and investors should acknowledge that near-term conditions are uncomfortable, and that they might remain that way for a while.
Has the thesis actually changed?
If you step back from the daily price chart, you'll see a different picture entirely. Over the last 10 years, Bitcoin's value has increased by 31,320%, even after the recent pullback. That rise rests on two structural pillars, one being a fixed supply, and the second being a slowing rate of new issuance. And neither of those factors is changed by the coin's recent price action.
There can only ever be 21 million Bitcoin created. Halving events occur roughly every four years, and historically they have tightened supply enough that, over time, prices adjusted upward to persuade holders to part with their coins. This asset will continue to remain scarce.
Meanwhile, Wall Street's footprint is now enormous. As of mid-November, spot Bitcoin exchange-traded funds (ETFs) collectively hold more than 1.5 million coins, around 7.3% of total supply, with assets under management of about $141.5 billion. A growing slice of Bitcoin is thus sitting in vehicles whose mandate is long-term exposure rather than quick flips. That makes it harder for the float that actually trades to expand meaningfully without much higher prices.
So, is Bitcoin still a buy in 2025 after this drop?
For investors with a long time horizon and a strong stomach, the answer is still very much yes. Its investment thesis is simply the same as it ever was, and macroeconomic uncertainty and big holders selling hardly affect it.
