Bitcoin falling below $60,000 to hit a new cycle low left investors searching for someone to blame. According to Greg Cipolaro, global head of research at NYDIG, there probably isn’t just one.
In a report last week, he argued that bitcoin and the broader crypto market face several overlapping headwinds weighing on prices.
AI business is at the top of his list as bitcoin increasingly competes for capital with a sector that has become the market’s dominant growth model.
The overlap between AI and crypto investors is greater than many think, he argued. Both attract investors who seek exposure to emerging technologies and outsized returns. As AI-related stocks continue to outperform, capital has followed and shifted away from crypto, he wrote.
Investors are also bracing for what could be the biggest IPO round in the tech sector in years. Companies such as SpaceX, OpenAI, and Anthropic are expected to eventually go public, with SpaceX already in the process of making its debut. Large IPOs often incentivize institutions to raise cash and reduce existing positions ahead of new offerings, creating a potential barrier to crypto demand, he wrote.
Crypto is also grappling with a series of industry-specific concerns.
Treasury Secretary Scott Bessent’s claim that U.S. authorities seized around $1 billion in Iran-linked crypto assets has raised questions about the government’s reach into digital asset markets. Details remain limited, but the episode challenged one of the main crypto narratives for some investors, Cipolaro said.
The threat of quantum computing has also returned to the spotlight after researchers published new work showing that the computing resources needed to attack widely used cryptographic systems could be declining faster than previously thought.
Then there is Strategy (MSTR) which sells Bitcoin.
The sale of 32 BTC, worth $2.5 million at the time, was insignificant from a supply perspective, but carried more weight psychologically. Strategy has spent years acting as one of the most consistent buyers in the market, Cipolaro said. Any suggestion that it could become a source of supply, he argued, forces investors to rethink an important pillar of the bullish scenario.
Taken together, these developments could explain why Bitcoin has struggled despite no obvious deterioration in the network’s underlying activity or adoption trends.
“Considered independently, none of these developments appear sufficient to cause a major correction in bitcoin,” Cipolaro wrote. “Considered collectively, they help explain why price action has weakened despite the absence of a clear deterioration in underlying adoption metrics.”
Has bitcoin found a bottom?
Cipolaro’s on-chain analysis offers a mixed answer.
Several indicators are approaching levels that have historically coincided with major lows, he noted. Bitcoin’s MVRV ratio has fallen to 1.2, close to the level where market value converges with investors’ overall cost basis. The percentage of supply held in profit has recently fallen below 50%, another metric often associated with capitulation.
Yet the decline itself remains relatively modest by historical standards.
Bitcoin has fallen about 53% from its peak ($126,000 in October), a much shallower decline than the 75-90% declines seen in previous cycles, he pointed out.
There is also a temporal element: the three previous bitcoin bear markets lasted more or less a year from peak to trough, with the exception of the very first bear market which ended in 163 days in 2011.
Friday’s drop below $60,000 occurred just 242 days after the peak.
This means either that institutional adoption has fundamentally changed the cyclical behavior of bitcoin, or that the market has simply not yet reached a true capitulation phase.
“On-chain data suggests that the market has undergone a significant reset,” Cipolaro wrote.
But whether the bottom is already in place “probably depends on whether institutional demand has structurally altered the cycle or simply delayed a deeper reset,” he added.
