Bitcoin Struggles to Maintain Its Credibility as the Crypto Market Plunges

As bitcoin struggles to maintain its credibility in front of distressed investors, the crypto market as a whole is plunging into a worrying spiral.

As bitcoin price struggles to regain credibility with distressed investors, the crypto market is plunging into a worrying spiral. The total capitalization at a level not seen since November 2021 attests to a multifaceted crisis.

General crash: hacking, memecoins, and macroeconomic panic

The drop is staggering. In 24 hours, bitcoin lost 8%, hovering around $86,700, its lowest since November 2021. Ether, Solana, and XRP are following the same trajectory, with declines of 8 to 10%.

But behind these figures lie key events. Last Friday, the Lazarus group, the cyber arm of North Korea, siphoned $1.5 billion in ETH and tokens from Bybit – the largest hack of a centralized platform. A shock for an already fragile ecosystem.

In the wake, memecoins, those speculative cryptocurrencies based on memes, have imploded. The LIBRA, promoted by Argentine President Javier Milei, lost 95% of its value in just a few hours, wiping out $4.5 billion.

A tough blow for retail investors, often drawn to these high-risk assets. “What the market is digesting is the end of the memecoin era,” analyzes Matt Hougan, CIO of Bitwise. A finding shared by Binance: “Corrections are moments when seasoned investors reposition themselves,” tempers Richard Teng, CEO of the exchange.

But the crisis does not stem only from crypto. Donald Trump’s statements about new tariffs have triggered widespread risk aversion. U.S. Bitcoin ETFs are recording $516 million in net outflows in a single day, and liquidations on futures contracts reached $227 million on Monday – the third record in six months.

Bitcoin in resistance: strengthened dominance in a bloodless market

Despite the turmoil, bitcoin shows relative resilience. Its dominance has risen from 41% in 2021 to 61% today, according to CoinGecko. A trend that underscores its status as a safe haven amidst the collapse of altcoins. Non-top 10 assets have seen their market share collapse from 25% to 9% in three years. Evidence that investors are fleeing speculation to retreat to the king asset.

This strength, however, hides a less glorious reality. Bitcoin is caught between the fall of memecoins and macroeconomic mistrust. Hopes are now pinned on institutional adoption, stablecoins, and a DeFi 2.0. But these levers struggle to compensate for the collapse of speculative niches.

Another glimmer of hope: regulators seem to be loosening the vise. The SEC has closed its investigations into Uniswap Labs, Coinbase, and Robinhood – a positive signal after years of tug-of-war. A crucial development to restore confidence, but one that comes late in the face of the capital hemorrhage.

The 12% of bitcoin investors at a loss are just the tip of the iceberg. The market is undergoing a necessary purge, sweeping away excesses and hollow promises. Memecoins, hacks, and macroeconomic shocks have exposed the vulnerabilities of an still immature ecosystem, while China injects 300 billion yuan into its banking system through an MLF operation.

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Fascinated by Bitcoin since 2017, Evariste has continuously researched the subject. While his initial interest was in trading, he now actively seeks to understand all advances centered on cryptocurrencies. As an editor, he strives to consistently deliver high-quality work that reflects the state of the sector as a whole.