Bitcoin (BTC) Market Has Erased This Year's Gains After a Three-Day Selloff

Bitcoin fell below $92,000 on Binance on Thursday, hitting a new low for the year and moving further away from December’s record high around $108,000.

The broader crypto market also pulled back from recent highs, with memecoins and tokens linked to artificial intelligence (AI)-powered chatbots and platforms experiencing the steepest declines.

Among the top 100 cryptocurrencies by market capitalization, AI agent token AI16Z and the recently airdropped HYPE token saw the steepest drawdowns, both falling around 10% over the last 24 hours, according to CoinGecko.

While memecoins were the best performing sector over the past year, tokens related to AI agents are currently dominating crypto mindshare – a quantitative metric generated by AI startup Kaito.

Meanwhile, U.S. spot bitcoin exchange-traded funds (ETFs) saw their second-largest daily withdrawals of all time on Wednesday.

According to SoSoValue, U.S. spot bitcoin ETFs saw $582.9 million in outflows, while the figure for spot Ethereum ETFs stood at $159.3 million.

The recent selloff comes as the U.S. Dollar Index (DXY) trades above 109, marking a two-year high.

The index measures the greenback’s strength relative to a basket of foreign currencies, and the price of bitcoin and crypto markets tend to have an inverse correlation with DXY.

“It’s remarkable that bitcoin is holding near $100,000 and crypto is holding up well with the dollar at its highest level in over two years,” Seth Ginns, managing partner and head of liquid investments at CoinFund, told Unchained.

According to Ginns, he expects the administration of President-elect Donald Trump to look to contain further gains in the dollar.

“They probably won’t want the dollar to break out to a new high, which means we’re likely going to see an end to this constant move higher in the dollar, which should be a new tailwind for crypto,” Ginns added.

DB News also reported late Wednesday that the Department of Justice was cleared to sell $6.5 billion worth of bitcoin seized from Silk Road.

According to a Dec. 30 court filing, Richard Seeborg, chief U.S. district judge for the Northern District of California, denied a motion to block the forfeiture of 69,370 bitcoins from Silk Road, effectively giving the go-ahead for the government to offload BTC.

Traders are speculating on the tension between the current administration and the upcoming one, considering that Trump has pledged support of the U.S. government stockpiling BTC.

The U.S. government currently holds about 198,109 bitcoins.

According to Reuters, crypto lobbyists are encouraging Trump to issue an executive order in his first 100 days to establish a strategic reserve of bitcoin, provide banking services for crypto firms, and build an advisory committee focused on the crypto space.

Users on prediction-betting platform Polymarket place odds at a 27% probability that Trump will create a Bitcoin reserve in his first 100 days.

“Until the inauguration, we’re probably in a holding pattern,” Ginns further wrote over Telegram. “So there could be some chop in the near-term.”