A leverage washout, tightening liquidity, and defensive capital positioning define this drawdown not a breakdown in Bitcoin’s technology or long-term thesis.

Bitcoin’s retracement from its October 2025 all-time high near $126,000 to recent lows around $60,000 has tested investor conviction. Yet the evidence suggests this decline reflects macroeconomic tightening and systemic deleveraging rather than structural weakness in the Bitcoin network. As forced leverage unwinds and defensive positioning peaks, markets are laying the groundwork for the next accumulation phase.

Market News

Macro Headwinds — Not Protocol Failure

The recent drawdown unfolded against a convergence of macro and geopolitical shocks that collectively pressured global risk assets. China’s renewed rare-earth mineral export restrictions reignited supply-chain concerns across semiconductor, hardware, and AI infrastructure markets. Simultaneously, President Trump’s latest tariff escalation proposals amplified trade uncertainty and revived fears of retaliatory policy tightening. The January jobs report added further pressure, with steady payroll growth and resilient wage inflation reinforcing the Federal Reserve’s “higher-for-longer” posture. U.S. Treasury yields pushed toward 4.20% as rate-cut expectations were repriced, tightening financial conditions across equity and credit markets.

Layered on top of these macro forces was an AI-driven shock to growth sentiment. Anthropic’s latest announcement accelerated investor concerns around rapid automation and margin compression across software and knowledge-based industries. High-multiple, forward-duration equities sold off sharply as markets repriced long-term growth assumptions. That de-risking did not remain isolated to technology; it propagated outward across small caps, credit markets, and other risk-sensitive assets.

Bitcoin, increasingly trading as a liquidity-sensitive, long-duration asset, moved alongside them.

Importantly, Bitcoin’s price moved almost in lockstep with U.S. software equities during the most recent sell-off. To illustrate this, we mapped the S&P NA Technology Software Index to the S&P Bitcoin Futures Index since Jan 2022 (Total Return). As you can observe, the index value of both indices is highly positively correlated, which we confirmed by running a Pearson’s Correlation Coefficient which resulted in a value of 0.96. This correlation suggests broad de-risking of growth-oriented portfolios rather than crypto-specific deterioration. The drawdown reflects liquidity compression across risk assets, not a failure within the Bitcoin protocol.

The broader tech sell-off was catalyzed by Anthropic’s latest AI announcement, which materially advanced the narrative around rapid AI capability expansion and automation. Markets interpreted the development not simply as innovation, but as acceleration — increasing competitive pressure across software, services, and knowledge-based industries. Investors rotated out of high-multiple, forward-duration equities as risk models repriced growth expectations and margin assumptions.

That repricing did not stay contained within software. The shock propagated outward:

• AI-sensitive software equities sold off first
• Growth indices followed
• High-beta small caps weakened
• Credit spreads widened modestly
• Risk assets broadly de-levered

Bitcoin, trading increasingly as a long-duration growth asset, moved with them. Meanwhile, gold rallied. Which raises the natural question:

If Bitcoin is a store-of-value asset, why is it so highly correlated to AI-replacement-driven fears?

Bitcoin: Growth Asset Today, Store of Value in Formation

The recent correlation with high-growth equities naturally raises the central question: Is Bitcoin a store of value like gold, or a growth asset like technology stocks?

The answer is both — but in sequence. Bitcoin’s design supports a long-term store-of-value thesis:

• Fixed supply
• Decentralized infrastructure
• Independence from sovereign monetary systems
• Proven resilience across boom-bust cycles

Today, Bitcoin is still transitioning from:

“High-risk, high-growth digital asset” → “Monetary reserve asset.”

Price behavior today still reflects adoption growth rather than reserve maturity.

Bitcoin is 17 years old. Its price reflects expanding network adoption and institutional integration — characteristics of a growth asset. Its design — fixed supply, decentralized governance, independence from sovereign control — supports a long-term store-of-value thesis. It has demonstrated resilience across crises, like during Trump’s “Liberation Day” tariff announcement in April 2025, which sent traditional markets into a freefall while Bitcoin climbed ~8%. But in capital markets, perception lags architecture.

As long as markets price Bitcoin primarily on adoption growth and liquidity sensitivity, it will behave like a long-duration asset during risk-off events. That does not invalidate the store-of-value thesis — it reflects its stage of monetary evolution.

If Bitcoin succeeds in becoming a dominant digital monetary asset in a future defined by AI agents, tokenized capital markets, and blockchain-based settlement systems, its return profile may structurally evolve toward:

• Lower volatility
• Lower correlation to equities
• Lower expected long-term returns

The transition will not be linear. Bitcoin has already demonstrated its ability to act as a monetary hedge during specific episodes of fiscal stress and banking instability. But widespread perception shifts take time. Gold’s status was not granted in a decade, it has been valued highly since before recorded history — a valuation spanning millenia, not decades. Bitcoin is still earning its status. And as that transition progresses, the correlation structure will evolve with it.

A Historic Deleveraging Reset

Another factor that contributed to Bitcoin’s short term devaluation was the historic crypto futures liquidations by institutional investors, not fundamentals.

• Futures open interest dropped from approximately $61 billion to $49 billion in one week and more than 45% from the October peaks
• Roughly $9 billion in liquidations accompanied Bitcoin’s fall toward $60,000
• Aggregate perpetual futures open interest across major exchanges has fallen by more than half since October
• Funding rates turned negative, reflecting defensive positioning

Such resets historically mark the midpoint of bear phases rather than their conclusion. Speculative excess has been flushed from derivatives markets, reducing fragility and creating a healthier base.

Notably, on-chain indicators show no material spike in long-term holder distribution.
Structural conviction remains intact.

Stablecoin Dominance Near Cycle Extremes

Stablecoin market share has surged above 10%, exceeding levels seen during the FTX collapse. Historically, peaks in stablecoin dominance have coincided with market bottoms, as capital rotates defensively while remaining within crypto infrastructure.

This distinction is critical: capital is not exiting the ecosystem, it is sidelined within it.

Current readings near 10.3% suggest markets are approaching defensive saturation. Historically, such positioning precedes redeployment into risk.

U.S.-Based Selling and Structural De-Risking

Recent weakness appears concentrated among U.S.-based sellers. During market lows, Bitcoin traded at a discount on Coinbase relative to Binance — historically indicative of domestic risk reduction. U.S.-listed spot Bitcoin ETPs experienced approximately $318 million in net outflows in early February.

At the same time, there is no evidence of large-scale liquidation from early long-term holders. The deleveraging appears institutional and macro-driven — not existential.

The drivers were portfolio de-risking, regulatory uncertainty around the CLARITY Act, and rate volatility — not a breakdown in network security, hash rate, or usage.

Liquidity Outlook: Constructive into Late 2026

While macroeconomic pressures may persist through the Federal Reserve leadership transition and geopolitical tensions, liquidity conditions are expected to gradually improve.

Analysts point to resumed Treasury bill purchases and potential liquidity injections as constructive for risk assets over the coming quarters. Robust U.S. growth alongside moderating inflation could create a supportive backdrop for both equities and digital assets into late 2026.

As liquidity stabilizes, assets with structural adoption tailwinds typically lead.

Positioning for the Next Phase

The combination of:

• 50%+ drawdown from peak
• ~$9 billion liquidation purge
• Stablecoin dominance above 10%
• Open interest contraction exceeding 45%
• Negative funding rates
• Defensive options skew

…has historically marked accumulation zones rather than structural breakdowns.

Bitcoin’s fundamentals remain intact. Hashrate continues expanding. Institutional infrastructure deepens. Regulatory clarity progresses incrementally. Capital remains inside the ecosystem awaiting redeployment.

The Strategic Allocation Window

Macro-driven corrections create asymmetric opportunity. Investors deploying capital during leverage resets historically capture the strongest risk-adjusted returns in subsequent cycles. The current environment reflects exhaustion, not structural failure.

Bitcoin remains uniquely positioned at the intersection of:

• Monetary debasement hedge
• Digital-native store of value
• Institutional settlement rail
• Adoption-driven network growth

The 2026 reset is not a repudiation of Bitcoin. It reflects growth-asset volatility within a network maturing toward monetary status. The long-term thesis remains intact. The volatility is the transition.

Why This Matters for Allocators and Bursera

For allocators seeking exposure to Bitcoin’s long-term supply scarcity, digital monetary adoption, and institutional integration, today’s pricing represents a compelling entry point relative to prior cycle peaks.

At Bursera Capital, our mandate centers on disciplined, protocol-driven exposure to Bitcoin with active risk management across market regimes. Periods of broad liquidation and macro stress are when strategic allocation decisions compound most effectively.

Markets recalibrate before they recover. This recalibration is underway. And recalibrations create opportunity.