Why Bitcoin’s latest drop signals a shift in market control

Bitcoin’s latest slide is not just about falling prices - it reflects a clear change in who controls the market. Data showed that the world’s largest cryptocurrency has dropped more than 40% from its October high above $126,000 and briefly fell below $73,000 this week, its lowest level since November 2024. 

Crucially, bitcoin has now slipped below its True Market Mean Price, according to analysts, a valuation threshold that historically separates bull-led markets from bear-dominated ones.

This breakdown comes as global investors retreat from risk amid AI-driven equity sell-offs and rising geopolitical tensions. With gold surging nearly 7% in a single session and volatility climbing across asset classes, bitcoin’s behaviour suggests that market leadership is shifting away from buyers and towards sellers - a transition that could shape price action for months ahead.

What’s driving Bitcoin’s latest drop?

Bitcoin’s decline has unfolded alongside a broader risk-off move across financial markets. US equities stumbled as confidence in the artificial intelligence trade weakened, with the Nasdaq falling 1.4% and major technology stocks selling off sharply. 

Disappointing cloud growth from Microsoft, combined with rising AI investment costs, reignited concerns that valuations across the tech sector had run ahead of sustainable profits.

As equities fell, speculative assets followed suit. Bitcoin traded in lockstep with high-beta technology stocks rather than serving as a hedge, reinforcing its sensitivity to liquidity conditions. When investors reduce risk exposure, bitcoin often absorbs outsized losses, particularly during periods when leverage remains elevated across crypto derivatives markets.

Geopolitical developments compounded the pressure. Reports that the US shot down an Iranian drone near a US aircraft carrier pushed the VIX volatility index briefly above 20, a level associated with heightened market stress. 

Capital rotated rapidly into traditional safe havens, with gold and silver posting double-digit moves over the week, leaving bitcoin on the wrong side of defensive positioning.

Why it matters: A break below the true market mean

The most important signal from this move is bitcoin’s fall below its True Market Mean Price, currently estimated near $80,000. 

This metric reflects the average historical cost basis of all bitcoin holders and is widely used to assess whether the majority of investors are in profit or loss. When prices remain above this level, buyers typically retain control. When prices fall below it, selling pressure often intensifies.

In previous cycles, this shift has marked a change in market regime. During the 2022 downturn, bitcoin’s weekly close below the same metric preceded a seven-month decline that eventually pushed prices down by more than 55%. While current conditions differ, the behavioural response is similar: underwater holders become more inclined to sell rallies, limiting upside momentum.

Gerry O’Shea, head of global market insights at Hashdex, highlighted that bitcoin’s divergence from gold reflects how investors currently perceive risk. Gold has now outperformed bitcoin over the past five years, signalling that markets continue to favour established stores of value during periods of macro uncertainty. That shift in preference matters when assessing who holds pricing power.

Impact on crypto markets and investors

The immediate impact has been visible across the crypto market. Bitcoin’s sharp intraday drop triggered liquidations across leveraged positions, accelerating downside moves and dragging major altcoins lower. When market control shifts towards sellers, volatility tends to rise as thin liquidity amplifies price swings.

For retail investors, the implications are more structural. Many participants entered during the late-2024 rally, meaning a growing share of holders are now sitting on unrealised losses. Historically, this reduces risk appetite and delays recoveries, as confidence takes time to rebuild. Institutional flows have also become more selective, with investors favouring commodities and defensive assets over digital currencies in the current environment.

Expert outlook: What happens next

Looking ahead, analysts expect bitcoin to remain volatile as the market searches for a new equilibrium. Regulatory uncertainty, macroeconomic instability, and tightening financial conditions all limit the likelihood of a rapid rebound. O’Shea expects near-term turbulence to persist as crypto continues to integrate into mainstream financial infrastructure, even as long-term adoption trends remain intact.

History suggests that breaks below key valuation metrics rarely resolve quickly. Instead, markets often enter a prolonged phase of consolidation or gradual decline as weaker hands exit and stronger holders accumulate. Over the next three to six months, bitcoin’s ability to reclaim the $80,000 level will be closely watched as a signal of whether buyers can regain control or whether the balance of power remains firmly with sellers.

Key takeaway

Bitcoin’s latest drop signals more than short-term weakness - it points to a shift in market control away from buyers and towards sellers. As risk appetite fades across global markets, crypto is behaving less like a hedge and more like a speculative asset. The next few months will likely define whether this move becomes a prolonged reset or a base for recovery. For now, patience and risk awareness remain critical.

Bitcoin technical outlook

Bitcoin has continued to move lower within its broader structure, with the price dipping below the lower Bollinger Band before stabilising near $76,400. The Bollinger Bands remain widely expanded, indicating that volatility is still elevated following the recent downside acceleration.

Momentum indicators show early signs of stabilisation: the RSI has begun to rise from oversold territory, reflecting a moderation in downside momentum after the sharp decline. Trend strength remains high, with ADX readings elevated, pointing to an active and mature trend environment despite the recent loss of directional momentum. 

Structurally, price is now positioned well below the former resistance zones around $90,000, $107,000, and $114,000, highlighting the extent of the preceding move.