By Frances Yue
The pioneering cryptocurrency has seen its value fall by more than half since an October peak
Bitcoin is on track for its worst first half of a year since 2022.
Crypto investors had hoped that increased institutional adoption and a friendly administration in Washington could help bitcoin, the world’s largest cryptocurrency, break free from the boom-bust cycles that have plagued it for much of its existence.
But bitcoin’s performance during the first half of 2026 has defied those expectations. The cryptocurrency has fallen into a deep drawdown, recently trading at less then half of its peak near $126,273 reached in October.
Since the start of the year, bitcoin (BTCUSD) has fallen by 33%, to about $58,647 on Tuesday, putting it on track for its worst first half of a year since 2022, when it fell 58.83%, according to Dow Jones Market Data.
It’s just the latest sign that the launch of a whole ecosystem of ETFs has done little to buttress bitcoin against the whims of mercurial investors.
“A lot of investors were thinking that the launch of bitcoin exchange-traded funds [in January 2024] was really going to stabilize the asset, and these deep bear markets were a thing of the past,” said Jim Ferraioli, head of crypto research at Charles Schwab.
That’s one key reason why this latest pullback probably “stings a little more from a psychological standpoint, beyond just seeing your investment get cut in half,” Ferraioli said in a phone interview.
Investors have pointed to a number of issues driving the selloff, including the fear that quantum computing could eventually threaten the encryption that helps keep bitcoin secure.
How bad has this bear market been?
To be sure, even the latest bear market for bitcoin is showing some signs of improvement compared with earlier drawdowns. So far, this one has been milder – bitcoin was down a little more than 50% from its peak, compared with drawdowns of as much as 80% during previous declines, according to Ferraioli.
For example, bitcoin was down about 53% roughly 267 days after its October peak, according to Jake Kennis, senior research analyst at Nansen. At the same point in the 2021-’22 bear market, bitcoin had already fallen by about 63%. It eventually bottomed after registering a roughly 75% decline.
But for investors in bitcoin ETFs, this has probably been cold comfort. The average purchase price for investors who bought bitcoin ETFs has been around $83,000, according to Ferraioli. That means the average holder of a bitcoin ETF is sitting on a sizable paper loss.
Some are throwing in the towel. Bitcoin ETFs in aggregate posted net outflows for seven straight weeks through last week, the longest streak of weekly outflows on record, according to Dow Jones Market Data. BlackRock’s iShares Bitcoin Trust IBIT, the largest bitcoin ETF, has seen 17 straight weeks of outflows, its longest streak since a 25-week stretch that ended April 11, 2025.
Smaller cryptocurrencies, often referred to as altcoins, have fared even worse. Many altcoins were down 90% or more from their peaks, according to Joe Sticco, co-founder of Cryptex Finance, which builds index infrastructure for digital assets. “The selling is just the highest it’s ever been” in the altcoin space, he said in a phone interview.
What drove the decline
There are several sources of pressure behind bitcoin’s decline, including fears of Federal Reserve interest-rate hikes, a stronger U.S. dollar and concerns that Strategy (MSTR), the largest corporate holder of bitcoin, could sell more of its holdings. All of these issues have been augmented by a broader rotation of speculative capital away from crypto, according to Cory Klippsten, chief executive at financial services firm Swan Bitcoin.
Higher rates and a stronger dollar tend to weigh on bitcoin and other assets that do not generate income. Meanwhile, Strategy disclosed on Monday a bitcoin monetization program that could include selling some of the cryptocurrency to build up its U.S. dollar reserves and fund repurchases of its common stock, marking a shift from its long-running strategy of accumulating bitcoin.
Another major headwind has been the AI trade, which has attracted significant attention and capital away from crypto, said Shubh Varma, co-founder and chief executive of Hyblock Capital.
In the past, traders came to crypto because opportunities for short-term gains were harder to find in the stock market. But increasingly, many hot AI stocks are behaving like bitcoin was supposed to behave, Varma said.
At some point, dip buyers will likely re-emerge. But Varma said he believes bitcoin has a bit further to fall first. He expects the crypto could ultimately bottom somewhere between $35,000 and $55,000 before finding a durable floor.
-Frances Yue
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06-30-26 1758ET
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