Bitcoin News This Week — ChangeHero Digest

Bitcoin plunged below $65,000 this week, marking a dramatic reversal from its October highs and wiping out gains made since Donald Trump's return to office with his much-touted pro-crypto agenda. Yahoo Finance reports the cryptocurrency dropped 9.4% in 24 hours and tested the $60,000 level, putting it on track for a nearly 16% weekly decline. The selloff has pushed Bitcoin to a 16-month low and sparked fresh debate about whether the crypto rally was ever sustainable—or if it was simply riding a wave of political hype that has now crashed against the rocks of economic reality.

The timing couldn't be more ironic. Trump swept back into office promising to make America the "crypto capital of the planet," but his administration's actual policy moves tell a different story. The broader crypto market has shed nearly $1 trillion in value over the past month according to CoinMarketCap, and sentiment has cratered to "extreme fear" territory. What's driving this brutal correction, and what does it mean for anyone who bought into the narrative that crypto was finally going mainstream?

The Trump Effect: Promise vs. Reality

When Trump returned to office in January 2025, he signed an executive order aimed at establishing U.S. crypto dominance on the global stage. The BBC notes that the administration dissolved the Department of Justice team focused on crypto enforcement and effectively halted the SEC's crypto-related investigations. On paper, this looked like the regulatory green light the industry had been waiting for.

But here's the twist: easing enforcement doesn't create value. It just removes friction. And when that friction disappears, what you're left with is a clearer view of fundamentals—which, in crypto's case, aren't exactly rock-solid. Democrats on the Senate Judiciary Committee have pointed out that Trump himself amassed crypto holdings worth over $11 billion and reportedly gained $800 million in personal income from crypto transactions since taking office. The question investors are now asking is whether his pro-crypto stance was ever about policy or simply about protecting his own portfolio.

The administration's nomination of Kevin Warsh as the new Federal Reserve chair added fuel to the fire. Deutsche Bank attributed part of Bitcoin's latest drop to Warsh's hawkish reputation; he's expected to keep interest rates higher for longer. Higher rates mean less liquidity chasing speculative assets like crypto. In other words, the very administration that promised to turbocharge crypto may have just appointed someone who'll starve it of the cheap money it needs to thrive.

The Economic Storm Clouds Gathering

Bitcoin doesn't trade in a vacuum. It's tethered to broader economic sentiment, and right now that sentiment is turning sour. Fresh data from Challenger, Gray & Christmas showed U.S. employers announced over 100,000 layoffs in January—the worst January since 2009. Weekly initial jobless claims for the week ending January 31 came in at 231,000 versus economists' estimate of 212,000, signaling cracks in the labor market.

When people start worrying about their jobs, they don't double down on Bitcoin. They sell it and move to safer assets. And that's exactly what we're seeing. According to Bitcoin Magazine, U.S.-listed spot Bitcoin ETFs recorded persistent outflows—more than $3 billion last month alone, following $2 billion in December and $7 billion in November. Institutional money isn't rotating out of crypto on a whim; it's responding to deteriorating macro conditions.

The latest selloff extended Bitcoin's 30% drawdown over the past month and coincided with another $2 billion in liquidations. That's forced liquidations of leveraged positions, which accelerates the downward spiral. The crypto market as a whole has lost $2 trillion in value since peaking in October, according to CoinGecko.

Below Production Cost: A Troubling Signal

One of the more concerning data points comes from JPMorgan's analysis. The bank estimated Bitcoin is now trading below its production cost of approximately $87,000. For those unfamiliar with how this works, Bitcoin's "production cost" is essentially the break-even point for miners—the electricity, hardware, and operational expenses required to mine one Bitcoin.

When the market price dips below production cost, miners operate at a loss. That's unsustainable, and historically it's been a signal that capitulation is near. Miners will either shut down operations or sell off inventory to cover costs, which adds more downward pressure. Bitcoin block rewards are currently 3.125 BTC and are forecast to drop to about 1.56 BTC by mid-2028 at the next halving. That means mining will become even less profitable unless the price recovers significantly.

At the same time, JPMorgan noted that Bitcoin's risk-adjusted profile versus gold has improved. The bank pointed out that Bitcoin's volatility relative to gold fell to a record low—the bitcoin-to-gold volatility ratio is now near 1.5. That sounds positive, but context matters. Since October 2025, gold has risen roughly one-third while Bitcoin has fallen nearly 50% from its peak above $126,000. Lower volatility doesn't mean much if the asset is simply trending downward at a steady pace.

The Bear Case: How Low Can It Go?

Analysts are now throwing out price targets that would have seemed absurd just months ago. Stifel suggested Bitcoin could fall as low as $38,000. Bloomberg Intelligence's Mike McGlone went even further, predicting on February 1 that Bitcoin could drop to $10,000 in a crash resembling the 2008 financial crisis.

Are these doom-and-gloom predictions realistic? Maybe. Bitcoin has a history of violent corrections followed by slow, grinding rallies. What's different this time is the macro backdrop. In previous cycles, central banks were cutting rates and flooding the system with liquidity. Now, they're tightening or at best pausing. That's a fundamentally different environment for risk assets.

There's also the question of how much speculative froth still needs to be wrung out. Economist Dean Baker made an interesting observation: crypto's decline raises purchasing power for non-crypto holders by removing what he called "fake money" demand for scarce goods. He estimated major cryptocurrencies have shed over $1.2 trillion in market cap. In other words, wealth that was tied up in crypto (and arguably inflating prices elsewhere) is now gone. That's deflationary for speculative assets but potentially stabilizing for real-world goods and services.

The Bull Case: BlackRock and the Long Game

Not everyone is panicking. BlackRock's iShares Bitcoin Trust (IBIT) held about 771,000 BTC as of December 31, 2025, worth approximately $67.49 billion. That's 100% of the fund's portfolio weight. BlackRock CEO Larry Fink has been vocal about his long-term vision for Bitcoin. He said recent discussions with a sovereign wealth fund considered 2% to 5% allocations to Bitcoin, and he estimated that broad adoption of that approach would imply a price of $500,000 to $700,000 per Bitcoin.

Fink also emphasized that markets are at the beginning of tokenization of assets—stocks, bonds, real estate. He argued that digitizing securities could reduce settlement friction and costs. This is the long-term institutional thesis: Bitcoin isn't just a speculative asset; it's the foundation for a new financial infrastructure.

But here's the reality check. Institutional adoption at the scale Fink is describing takes years, not months. And in the meantime, price discovery happens in real time based on supply and demand—and right now, demand is collapsing. The fact that BlackRock is holding doesn't mean the floor is in. It means they're willing to weather the storm because they're playing a multi-decade game. Most retail investors don't have that luxury.

The Bottom Line

Bitcoin's crash below $65,000 isn't just a technical correction—it's a fundamental reassessment of crypto's place in a tightening economic environment. The Trump administration's pro-crypto promises have delivered on deregulation but failed to deliver on growth. Meanwhile, weakening labor data, persistent ETF outflows, and prices trading below production cost paint a picture of an asset class in distress.

JPMorgan's observation that Bitcoin is now more attractive than gold on a risk-adjusted basis might be mathematically correct, but it misses the point. Lower volatility during a 50% drawdown isn't a buying signal; it's a sign that speculative fervor has evaporated. And when you combine that with hawkish Fed expectations under Kevin Warsh and a sovereign wealth fund conversation that may or may not materialize in the next decade, the near-term outlook is bleak.

The bearish price targets from Stifel ($38,000) and McGlone ($10,000) are no longer fringe predictions—they're plausible scenarios if macro conditions continue to deteriorate. BlackRock's long-term bet on tokenization and institutional adoption is compelling, but it won't save retail investors who bought at $100,000 or $120,000 expecting a quick turnaround.

If you're holding Bitcoin, the question isn't whether it will eventually recover. It's whether you can afford to wait. And for most people, that wait just got a lot longer.