Bitcoin (CRYPTO: BTC) has fallen about 15% over the past week and more than 20% over the past month, prompting questions about what’s driving the decline and how much further prices could fall.
Six Reasons For Bitcoin Declines
Bitcoin’s recent sell-off has rattled investors, but Bitwise CIO Matt Hougan says a deep, prolonged crash like 2022 is unlikely even if volatility persists.
In a recent memo, Hougan said crypto’s weakness is being driven by several overlapping factors rather than a single catalyst.
He outlined six main pressures: long-term investors selling early to front-run the four-year cycle, retail attention shifting toward AI stocks and precious metals, a major leverage liquidation event, renewed fears of Federal Reserve hawkishness, concerns around quantum computing, and a broader risk-off macro environment.
Bitcoin is now down nearly 50% from its all-time high, with sentiment near levels seen at prior cycle bottoms. However, Hougan noted that selling by long-term holders is slowing, derivatives leverage has largely reset, and expectations for future rate cuts are beginning to build.
More Pain Ahead Or Is A Bottom In Sight?
Historically, Bitcoin drawdowns have reached 77% to 86% and lasted more than a year. While crypto markets are now more mature, making extreme crashes less likely, Hougan said further downside cannot be ruled out.
He added that market bottoms typically form through exhaustion, not excitement. The current environment, he said, resembles 2018 and 2022, periods that later proved to be strong long-term buying opportunities.
Hougan said recovery could come simply with time, but potential catalysts include regulatory clarity, a return to risk-on conditions, progress on quantum security, interest rate cuts and new AI-driven crypto use cases.
Despite weak prices, he said crypto’s long-term fundamentals remain intact, pointing to rising digital adoption, demand for non-fiat systems, stablecoin growth, tokenization and increasing Wall Street participation.
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