Bitcoin's capitalization is falling. What does this mean?

The material is not an investment recommendation

Bitcoin is in a downward trend. In less than a year and a half, it lost half of its value — on February 6, the asset's price fell by $60 thousand compared to $126,251 in October 2024. What is the reason for the decline in the value of cryptocurrencies and why investors are losing confidence in digital assets — in the Izvestia article.

Cryptocurrency Support

● US President Donald Trump has indeed taken a number of steps that should have had a positive impact on the cryptocurrency market. He granted amnesty to the former head of the Binance cryptocurrency exchange Changpeng Zhao. The American press notes that under Trump, 60% of lawsuits related to the circulation of cryptocurrencies were suspended, mitigated or canceled. The US president also allowed Americans to invest their retirement savings in gold and digital assets under the 401(k) retirement plan. These measures ensured the growth of cryptocurrencies over a short period of time, but they were not enough to consolidate their success.

● The drop on February 6 by 18% immediately per day — to $60 thousand — only continued the downward trend that has accompanied the cryptocurrency since the end of last year. Following bitcoin, the exchange rate of other cryptocurrencies collapsed, including Etherium, which fell by 20% in a day. The drop effectively reset the record growth of cryptocurrencies amid optimism from Trump's promises to liberalize the crypto market.

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Why is Bitcoin Falling

● The crypto market expected clear rules of the game from the American law on the regulation of cryptocurrency exchanges and digital assets CLARITY Act, but it was blocked by Democrats in the Senate on February 2. And in anticipation of another government shutdown, investors could lose optimism and start withdrawing funds from digital assets, which led to the fall of bitcoin.

● One of the reasons for the drop in cryptocurrencies was the general instability in the market due to the US trade wars, as well as fears of new conflicts due to Trump's claims to Greenland and threats against Iran. Kevin Warsh's candidacy proposed by the US President for the post of chairman of the US Federal Reserve System could also influence pessimism in the cryptocurrency markets, as Warsh is considered to be committed to a strategy of tight monetary policy.

● The digital currency market has recently seen an outflow of large investors, including banks and hedge funds, due to concerns about the so-called four-year cycle of bitcoin. Historically, bitcoin's growth occurs after halving — a reduction in remuneration to miners and a slowdown in the creation of new bitcoins about once every four years, which leads to a shortage of cryptocurrencies on the market. The last halving was on April 19, 2024, so now investors expect that the uptrend for this asset has already been passed and the decline may continue until the next cycle.

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What does this mean?

● Bitcoin has failed to meet expectations as an escape from inflation. The exchange rate of the digital currency has shown a weak connection with the main US stock indexes, which makes the behavior of bitcoin less predictable. Despite the fact that cryptocurrencies initially grew due to Trump and his statements, now the actions of the US president have a less noticeable impact on digital assets, and nervousness in the markets only increases the volatility of cryptocurrencies.

● Bitcoin has not become the "digital gold" that many investors hoped for. Unlike gold assets, which have shown significant growth over the past year in the face of geopolitical uncertainty, the value of bitcoin in the last months of 2025 only declined with small rebounds after falls.

● Due to the fact that institutional investors are withdrawing their funds from digital currencies, confidence in bitcoin is decreasing in the market. On February 8, the Fear & Greed Index was at the level of "extreme fear", which indicates that investors are selling their assets.

● Bitcoin is a speculative asset without reference to real value, and therefore, in the context of falling investor confidence, it is unlikely to grow significantly in the near future. The main danger of cryptocurrencies is the fact that they have "no bottom," meaning digital assets have no face value that would provide them with minimal liquidity. Nevertheless, bitcoin still has a chance to gain a foothold as digital money, since its issuance and circulation are not uncontrolled and are regulated by algorithms.