Bitcoin Prices Plunge After Market Turmoil, Sparking Doubts About Crypto Buying Frenzy

Bitcoin has fallen sharply after a volatile stretch that erased much of its recent momentum and raised new doubts about the market’s near-term outlook. After spending much of the past year trading above six figures and briefly climbing above $126,000 in October, the cryptocurrency dropped below $60,000 amid a broader risk-off move in markets, touching its weakest level since October 2024. By the end of the week, bitcoin had lost about 17% and was more than 50% below its all-time high, leaving investors questioning whether the bull case for the asset is weakening.

The selloff accelerated after Strategy, the company formerly known as MicroStrategy and one of bitcoin’s best-known corporate supporters, disclosed that it sold 32 BTC between May 26 and May 31 to help fund dividend payments on its preferred stock. Although the sale represented only a tiny fraction of Strategy’s total bitcoin holdings, the disclosure rattled traders because the company’s “never sell” stance had long been central to market confidence. Bitcoin fell on the news, Strategy’s stock also dropped sharply, and roughly $1.6 billion in leveraged positions were liquidated in the broader cascade.

Analysts disagreed over the importance of the sale. Some argued it was economically insignificant and did not change Strategy’s long-term accumulation thesis. Others said it showed the company could sell bitcoin if needed to protect its capital structure and shareholders, weakening the image of an unwavering corporate holder. Strategy co-founder Michael Saylor said the decline was the result of capital rotating into artificial intelligence infrastructure rather than any fundamental problem with bitcoin itself.

The move came as bitcoin’s two biggest narratives have also lost traction. For years, supporters promoted bitcoin as both digital gold and a high-beta technology trade. The digital gold argument was tested during geopolitical tensions earlier this year, when bitcoin rose as gold weakened, but that relationship faded as stock markets continued climbing. The tech correlation has also broken down: recent weeks saw bitcoin stop moving in step with the Nasdaq and S&P 500, even as semiconductor and AI stocks continued to rally.

Institutional demand through spot bitcoin ETFs also appears to have weakened. U.S.-listed bitcoin ETFs recorded their longest streak of net outflows on record, with billions of dollars leaving funds since mid-May. A small inflow on one later session did little to offset the damage, suggesting the steady demand expected from ETF buyers has not materialized during the downturn.

On the technical side, bitcoin briefly tested its 200-week moving average, a long-term support level that has often appeared in previous bear markets. On-chain data also showed more bitcoins sitting at a loss than in profit, a pattern that has historically appeared near market bottoms. Still, prediction markets and bearish traders are pricing in the possibility of further downside, with some expecting bitcoin could fall below $50,000 this year.

For investors, the message is that bitcoin remains highly volatile and can suffer deep drawdowns even after major rallies. The current slump reflects weakening narratives, ETF outflows, and a market rotation toward other risk assets, leaving no clear catalyst for an immediate rebound.