Bitcoin Down 30% in 2026, But Can It Recover?

The premier cryptocurrency fell to almost two-year lows amid institutional outflows as the market rotated back into AI and tech, leaving traders wondering if the bottom is in after losing 30% in 2026.

What's Driving the Market

• BTC tanks after three weeks of outflows, the longest institutional pullback ever, as investors focus on strong results from AI.
• Strategy's sale of Bitcoin is seen spooking investors at the wrong time, but the company has resumed purchases, calming the market a bit.
• The crypto space is under pressure from macroeconomic factors that have reduced risk appetite, leaving more speculative assets particularly vulnerable.

Crypto Losses Mount Amid Tech Rotation

Multiple factors have converged to lower cryptocurrency prices. But Bitcoin's drop to lows not seen since October of 2024, before the election of pro-crypto Donald Trump to the presidency, has gotten renewed attention. Cryptos have bounced a bit since hitting lows last Friday, but have failed to generate momentum so far, leaving traders to wonder whether this is a bottom or a new leg lower. The main driver of the 24% drop in BTC prices over the last month alone has been attributed to the longest-ever streak of outflows by institutional investors, who are piling into another technology: AI, with even the pending SpaceX IPO taking some of the blame. The selloff triggered some liquidations in the derivatives markets, which accelerated the downward pressure. However, to understand the move, it is important to look at what is motivating the reversal and the institutional flows that had previously supported crypto to record highs last year.

One of the triggers was Michael Saylor's Strategy selling BTC for the first time since 2022 on the first day of the month, breaking the perception of holding no matter what. Even though the company resumed purchases, its pivot towards active management of its balance sheet has weighed on a market already under pressure from persistent regulatory uncertainty and a rising dollar. With the Fed increasingly likely to raise rates, US Treasuries are attracting investors wary of risk amid geopolitical volatility. This has contributed to three consecutive weeks of outflows from crypto ETFs, prompting sell orders in derivatives.

Will BTC Recover?

Overall, the decline in cryptos is generally attributed to macro- and geopolitical events that are not specific to its fundamentals. The space remains highly speculative and is the most sensitive to a general risk-off environment, which makes it harder to pinpoint a bottom. Analysts debate whether Bitcoin has more downside before a recovery, drawing parallels to the 2022 decline. However, the surge in AI-backed tech stocks in recent days suggests investors are not entirely averse to risk, and it might simply be that major events in the tech space, like massive IPOs, have drained some of the oxygen from the market. Traders might focus on general risk clues more than crypto-specific news to see if a solid rebound is in the cards.

BTCUSD Double Bottom Bounce Offers Little Upside

Despite falling to $60K, the technical picture of Bitcoin suggests a potential double bottom, given the RSI shows a slight divergence at the lows. If the round support holds and bulls reclaim the middle VWAP at $70870 in the medium term, the break of the neckline at $$82900 would open the door to $100K+. However, the recent breakdown left behind a flag pattern that typically extends beyond its starting point, bringing into focus the $50K barrier next.

Source: SpreadEx | BTCUSD Daily Chart