The price of cryptocurrencies have declined sharply amid renewed tariff tensions and rising anxiety over the global impact of artificial intelligence on markets.
Bitcoin saw a significant decline, sending its price below $63,000 on Tuesday, with analysts attributing the downturn to a mix of macro shocks that rattled the already fragile market sentiment.
“Bitcoin’s move below $63,000 appears to reflect a broad deterioration in crypto sentiment rather than a single fundamental catalyst,” said Min Jung, associate researcher at Presto Research. “In the near term, macro headlines, particularly around tariffs and renewed geopolitical uncertainty, are reinforcing a risk-off tone across digital assets.”
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“What stands out, however, is that crypto has recently underperformed even as traditional risk assets have remained relatively resilient. That divergence suggests this is not purely a macro-driven selloff, but also a function of weak marginal demand, thinner liquidity conditions, and continued deleveraging within crypto native markets”, he added.
Bitcoin has reportedly fallen more than 50% from its October 2025 peak. The broader crypto market also followed suit, with total capitalization dropping over 4% overnight to $2.19 trillion.
Market sentiment deteriorated further as the Fear and Greed Index compiled by CoinMarketCap slipped to 11, signaling extreme fear. The reading declined from 14 just a day earlier, reflecting widespread bearishness across asset classes and regions.
Analysts attributed the downturn largely to capital outflows from the crypto ecosystem. Weak demand among U.S. investors has been cited as a key factor behind Bitcoin’s inability to sustain upward momentum.
Although often promoted as a hedge against financial instability, Bitcoin has recently mirrored risk assets, declining alongside the S&P 500 during periods of heightened volatility.
The digital asset’s current valuation marks a sharp reversal from late 2025, when optimism surrounding the election victory of Donald Trump fueled expectations of crypto-friendly regulatory policies. Recall that Bitcoin surged above $126,000 in October 2025 but has since retraced to levels last seen before that political shift.
The recent selloff has also affected its relative standing among global assets, pushing it down to the 13th position by market capitalization. According to Michael Saylor, CEO of Strategy, Bitcoin is currently in what he describes as its “wilderness” phase.
He compares the digital asset’s trajectory to early skepticism surrounding companies such as Amazon and Apple, arguing that mainstream validation could eventually follow though potentially after the most substantial gains have passed.
Technically, market watchers are increasingly cautious. Bitcoin is approaching a potential death cross formation on the three-day chart, a signal historically associated with extended downward trends. Analysts warn that if historical patterns repeat, the market could be entering the final downward phase of the current cycle.
Outlook
Near-term prospects for cryptocurrencies remain closely tied to macroeconomic sentiment and global risk appetite. Persistent tariff tensions, shifting capital flows, and uncertainty surrounding AI-driven market disruptions are likely to continue influencing investor behavior.
However, periods of extreme fear have historically preceded stabilization phases in digital asset markets. A sustained recovery would likely require renewed institutional inflows, clearer regulatory direction, or a broader rebound in global equity markets. Until such catalysts emerge, price action may remain volatile, with investors closely monitoring technical indicators and liquidity trends for signs of a structural turnaround.
If Bitcoin demonstrates resilience during the current climate of extreme fear, it could reframe market sentiment and trigger gradual capital reallocation. Conversely, failure to establish support at current levels may reinforce bearish momentum in the weeks ahead.