Why Has the Price of Bitcoin Plummeted? Experts Explain
By Max Zahn — February 2, 2026
The price of bitcoin took a sharp downturn over the past week, plunging roughly 10% as investors swiftly moved away from the world’s most popular cryptocurrency. Other digital assets experienced even steeper declines: Ethereum, the second-largest cryptocurrency, dropped nearly 20%, while Solana’s value was cut in half during the same period.
Experts consulting with ABC News attribute this recent slump to a combination of geopolitical tensions and economic uncertainties that have unsettled the financial markets and prompted a momentum-driven selloff. The initial price decline appears to have triggered liquidations of leveraged positions—positions funded with borrowed money—further intensifying downward pressure on prices.
“There are concerns about risk right now. The price of crypto tends to drop when investors look to take risk off the table,” said Bryan Armour, director of passive strategies research at Morningstar. “That may have precipitated the decline, and then it was like a snowball rolling downhill.”
Economic and Geopolitical Uncertainty Weigh on Markets
The broader economic landscape is uneasy. Recent data reveals a slowing labor market and inflation rates persistently above the Federal Reserve’s preferred 2% target. In parallel, geopolitical conflicts create additional jitters: ongoing disputes over Greenland, U.S.-backed leadership challenges in Venezuela, the protracted war between Russia and Ukraine, and escalating U.S. threats against Iran have all compounded investor anxiety in recent weeks.
Compounding these concerns, former President Donald Trump has proposed tariffs against Canada, South Korea, and several European nations as leverage on various foreign-policy matters—moves that add further unpredictability to global markets.
“Everything that’s been happening the last few weeks is definitely adding a lot of nervousness in the market,” explained Christian Catalini, founder of the MIT Cryptoeconomics Lab. “Anything that makes investors risk averse, of course, affects the price of bitcoin.”
Bitcoin’s Decline Extends Longer-Term Downtrend
This recent downturn is part of a more prolonged decline. Jim Reid, a research strategist at Deutsche Bank, noted in a memo that bitcoin currently trades approximately 40% below its peak reached in October 2025. By contrast, during that same timeframe, the S&P 500 index rose 5%, and gold prices surged 17%.
Bitcoin has registered monthly losses over the last four consecutive months—a streak not seen since the pandemic’s onset. Reid highlighted this fact as a signal of the sustained pressures on the digital currency market.
Analysts Reflect on Bitcoin’s Volatility
Despite the drop, some analysts expressed little surprise at the recent correction, given bitcoin’s meteoric rise last year. The cryptocurrency surged over 40% in late 2024 following Donald Trump’s election victory, fueled partly by his vocal support for digital currencies. After a dip in early 2025, bitcoin climbed again in the fall.
“There’s a natural limit to how high it can go up,” said Steve Sosnick, chief strategist at Interactive Brokers. “Bitcoin has always been a highly volatile asset since its inception about 15 years ago.”
Indeed, the cryptocurrency suffered drastic downturns exceeding 60% as recently as 2022, and previous pandemic years saw similarly dramatic fluctuations driven by waves of speculative buying and selling.
Despite such swings, bitcoin maintains an overall upward trajectory over the long term. Over the last five years, its price has nearly doubled, recording a 96% increase that outpaces the S&P 500’s 80% gain during the same period.
As of Monday, bitcoin’s price showed signs of recovery, ticking up after several days of losses.
Navigating the Unpredictable Crypto Market
The inherent volatility of cryptocurrencies makes precise price forecasting challenging. “The only certainty may be more volatility,” Armour said.
The advent of bitcoin exchange-traded funds (ETFs) has integrated cryptocurrency more deeply into traditional financial markets over the past two years, allowing a broader range of investors to participate without directly holding the coins. However, even with wider market participation, digital assets remain highly sensitive to shifts in investor sentiment.
“The best thing investors can do if they do want to get involved in bitcoin is to know their limitations,” Armour advised. “They shouldn’t have high confidence in any one outcome.”
As the crypto landscape continues to evolve amid an uncertain global backdrop, investors will need to brace for further volatility and closely monitor economic and geopolitical developments that could sway the market’s direction.
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