Bitcoin falling below $60,000 to a new cycle low has left investors scrambling for a culprit. 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 that have weighed on prices.
The AI trade is near the top of his list as bitcoin increasingly competes for capital with a sector that has become the market’s dominant growth story.
The overlap between AI and crypto investors is greater than many assume, he argued. Both attract investors seeking exposure to new technologies and high returns. As AI-related stocks continue to outperform, capital followed and rotated from crypto, he wrote.
Investors are also bracing for what could be the biggest tech IPO cycle in years. Companies like SpaceX, OpenAI, Anthropic are highly expected to eventually go public, with SpaceX already deep into the process of making its debut. Large IPOs often prompt institutions to raise cash and reduce existing positions ahead of new offerings, creating a potential headwind for crypto demand, he wrote.
Crypto has also struggled with a number of industry-specific concerns.
Treasury Secretary Scott Bessent’s claim that US authorities seized about $1 billion of Iranian-linked crypto assets raised questions about the government’s reach in digital asset markets. Details remain limited, but the episode challenged one of crypto’s core narratives for some investors, Cipolaro said.
The threat of quantum computing also returned to the conversation after researchers published new work showing that the computational resources required to attack widespread cryptographic systems may decrease 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 weighed more psychologically. Strategy has spent years operating as one of the market’s most consistent buyers, Cipolaro said. Any suggestion that it could become a source of supply, he argued, forces investors to rethink a key pillar of the bull case.
Taken together, these developments may explain why bitcoin has struggled despite no obvious deterioration in underlying network activity or adoption trends.
“Viewed independently, none of these developments appear to be sufficient to drive a major correction in bitcoin,” Cipolaro wrote. “Taken together, they help explain why price action has weakened despite the absence of a clear deterioration in the underlying adoption metrics.”
Has bitcoin bottomed out?
Cipolaro’s onchain analysis gives a mixed response.
Several indicators are approaching levels that have historically coincided with major bottoms, he noted. Bitcoin’s MVRV ratio has fallen to 1.2, close to the level where market capitalization converges with investors’ total cost basis. The percentage of offerings held in profit recently fell below 50%, another metric often associated with capitulation.
Even so, the reduction itself is relatively modest by historical standards.
Bitcoin is down about 53% from its peak ($126,000 in October), a much shallower decline than the 75%-90% pullbacks seen in previous cycles, he pointed out.
There’s also a time element: the previous three bitcoin bear markets lasted more or less a year from top to bottom, with the exception of its first ever bear market, which ended in 163 days in 2011.
Friday’s dip below $60,000 came just 242 days after the peak.
This means that either institutional adoption has fundamentally changed bitcoin’s cycle behavior – or that the market simply hasn’t reached a true capitulation phase yet.
“The onchain data suggests that the market has undergone a meaningful reset,” Cipolaro wrote.
But whether the trough is already in place “likely depends on whether institutional demand has structurally changed the cycle or simply delayed a deeper reset,” he added.
