Bitcoin's slide has no single cause. AI, tech IPOs, quantum, Strategy sale all play a role, NYDIG says

Multiple Headwinds Converge on Bitcoin

Bitcoin's recent price slide, which saw it drop below $60,000, is not attributable to a single cause but rather a convergence of several overlapping headwinds, according to Greg Cipolaro, global head of research at NYDIG. His report identifies various factors contributing to the market's pressure on Bitcoin (BTC) and the broader crypto market.

One significant factor is the AI trade, which has emerged as the dominant growth story in the market. Cipolaro argues that Bitcoin is increasingly competing for capital with the AI sector, as many investors seeking exposure to emerging technologies and high returns are rotating capital from crypto into AI-related stocks.

Another contributing element is the anticipation of a new tech IPO cycle, potentially featuring major companies like SpaceX, OpenAI, and Anthropic. Large IPOs typically lead institutions to raise cash and reduce existing positions in other assets, including crypto, to free up capital for new offerings.

Industry-specific concerns have also played a role. Treasury Secretary Scott Bessent's announcement about the seizure of approximately $1 billion in Iranian-linked crypto assets raised questions about governmental reach into digital asset markets. This incident, despite limited details, challenged some investors' core narratives around crypto's decentralization and censorship resistance.

The threat of quantum computing has also re-entered discussions. New research suggests that the computational resources required to attack widely used cryptographic systems might be decreasing faster than previously estimated, sparking security fears within the crypto community.

Finally, Strategy's (MSTR) sale of 32 BTC, though small in terms of supply ($2.5 million at the time), carried significant psychological weight. Strategy has long been viewed as a consistent buyer in the market, and any indication of it becoming a seller forces investors to reconsider a key pillar of the Bitcoin bull case, as Cipolaro explained.

Onchain Metrics and Market Bottom

Despite these converging headwinds, underlying network activity and adoption trends for Bitcoin show no obvious deterioration. Cipolaro notes that viewed independently, none of these developments would be sufficient to cause a major correction, but collectively, they explain the weakened price action.

Cipolaro's onchain analysis presents a mixed picture regarding whether Bitcoin has found a bottom. Several indicators are nearing levels historically associated with major bottoms. For instance, Bitcoin's MVRV ratio has fallen to 1.2, suggesting market value is converging with investors' aggregate cost basis. Additionally, the percentage of supply held in profit recently dropped below 50%, another metric often linked to capitulation events.

However, the current drawdown is relatively modest compared to previous bear markets. Bitcoin has fallen approximately 53% from its peak of $126,000, which is shallower than the 75-90% declines observed in prior cycles. Furthermore, the time elapsed since the peak (242 days) is shorter than the typical year-long duration of previous bear markets (excluding the 2011 cycle). This leads to a crucial question: has institutional adoption fundamentally altered Bitcoin's cycle behavior, or is a deeper capitulation phase merely delayed? Cipolaro concludes that while onchain data indicates a meaningful reset, the ultimate low depends on whether institutional demand has structurally changed the cycle or simply postponed a more significant correction.